1.0 INTRODUCTION
1.1 As businesses start, they all have an “entrepreneur” at the helm. This is the person who has the “good idea,” the skill to implement it, and the willingness to take the personal and financial risks required to go unprotected into a competitive environment.
1.2 Often there is a “naivety” in the way the business is started, and the driving ambition is often as simple as just “to be my own boss,” or “Dad did it, so I guess I’ll do it too, because I don’t know what else I’d do.”
1.3 If the business makes it, either by luck or good fortune, the owner starts to take credit for the profit and income of the company.
1.4 When the company grows to a certain size, there are certain things that have to happen, which we call “thresholds”, in order to allow it to grow larger. Neither Ross Perot ( E.D.S.© ) nor Bill Gates (Microsoft © ) grew to the size they did without going through and learning how to deal with these “growth” thresholds.
NOTE: When a
company is a reseller (retailer, auto dealer, etc.), and not either
a manufacturer or service provider, the same thresholds apply, but the dollar
volume is three to ten times the value stated here, depending on
product.
2.0 THE ENTREPRENEURIAL MODEL
2.1 The Entrepreneur usually figures he or she can “can do it all”, and when the company is small, they can. However, there are really four major functions in the management of a company:
2.1.1 The Product or Service. (referred to as Engineering in Functional Organization since the “Product” may have to be “designed”) This is where the Entrepreneur is expert. (People usually don’t go into a business they know nothing about, unless they buy a franchise where the “expertise” is presumed to be part of the package.)
2.1.2 The Administration. The “Boss” really doesn’t like all “that paperwork.” Bookkeeping becomes delegated to someone else. Often the Entrepreneur uses a spouse, sibling or child to “keep the books”. This sometimes leads to family disharmony because;
A. you can’t really “fire” a family member who doesn’t do a good job.
B. the person may not enjoy doing what is asked of them, and resents the need to “help” without much reward.
C. the person’s skills may not grow as fast as the company, creating dysfunction and confusion, as well as a poor information base
D. As more people are hired, as profits are made, as accounts payable and receivable grow, this quickly is a tedious full time occupation.
E. The owner or entrepreneur doesn’t really understand the numbers, therefore doesn’t really believe them, and makes decisions in a way that is contrary to what the numbers are saying.
2.1.3 The Sales. Often the Company starts because there is one good client (a friend) who is “in the bag”. (Someone who needs the expertise and is willing to help get the entrepreneur started.) The Entrepreneur, who was involved for the initial sales, gets involved with the Operations of the company, sales are neglected as the rest of the work load gets greater, and the business “tops out”, usually at very predetermined levels. Then they hire a good salesman as a manager, and that person becomes involved not in sales, but in implementing reactive strategies to assuage the Entrepreneur.
2.1.4 The Operations. Delivery of the Product and/or Service. Depending on the product or service, the actual “building and completion” of the goods is the operations. This takes craftsmen, trades people, assemblers, whatever, to actually “do” what ever it is we are billing for. In the beginning, the Operations and the Product are the same, but as we get bigger, the Entrepreneur has to decide what to focus on, (may also be Sales) depending on his or her love of the skills required to produce the product.
Remember, the more competitive the market you are in, the more these “rules” apply.
1.0 THE THRESHOLDS
Generally, there are some very clear decisions that need to be made at certain volume levels for many businesses. These “thresholds” are not “rigid”, but are very common. After a company is at least five years old, but more often ten or more, some plateaus are reached. Like it or not, they very likely apply to your organization also, but it is best not to try to “pick them apart” to try to prove them wrong, but to look for what is in sync with your group to see what you can gain.
1.1
At about $1,000,000.00, how sales are handled
becomes an issue. Usually, the Owner
either needs to hire a salesperson to help them grow the business or has to
dedicate a specific amount of his/her time (over 75%) to sales. However, many owners have trouble letting go
of clients, so they restrict the sales person and have far too many
“reviews.” The sales person has to be
given the authority to develop business, with the full knowledge a forehand
that it will not be “the same” as the way the owner would do it. Pricing, is a different issue, and with some
exception, salespeople should almost never be given price authority,
since they will tend to sell price over value.
i.e., cheaper. (read “Value Selling” & “5 Steps of the
Scheduling of resources starts to become an issue. The entrepreneur who kept schedules “in his head” starts to lose track of people and equipment, causing inefficiencies in utilization.
Reporting has to start to get more formal. Generally, we like to see Cash Flow reports, Budgets, Goals and Objectives, and a formal business plan in place. The accounting system needs to be computerized. A reasonable Chart of Accounts needs to be in place and monthly reports provided to your CPA/accountant. We should begin using S.W.O.T. analysis and Break Even calculations of potential opportunities to make business decisions.
Communications are no longer casual. Instructions and information need to be written down and disseminated. There need to be “rules” and guidelines for expectations of employees.
1.2 At the $2,000,000. level, the owner is often heard to say, “I don’t have time for that…” or in private, (or to him/herself) “I don’t know how to do that.”
Before we get to the $2,000,000.00 level a good working accounting system needs to (must) be installed and operating. The Chart of Accounts has to make sense operationally, and records need to be kept on a daily basis that can keep your silent partner (the I.R.S.) happy (and silent!!). Many small companies find that QuickBooks Pro or Peachtree gives them everything they need. If an obsolete system is in place, strong consideration needs to be given to making the relatively easy update/change.
However, the need for accurate forecasting is also imperative. The Cash Flow should be in place, sales quotas assigned, annual budgets done, and the Owner should be focused on the aspect of the business he/she enjoys most and not trying to “do it all”. Accounts (and accountants) tend to be “historians.” The finances need to be kept in a manner that allows the entrepreneurial owner to understand them and to be able to use the information in a fashion that will improve the company. We are not (though the I.R.S. is) just interested in last year. What we are going to do this year is much more important, and our financial information should help guide us.
There need to be regular “Management Meetings” so that all of the Management and Supervisors are working with the same and agreed upon information. These are formal, at a scheduled time and with an agenda. Job or Project schedules need to be discussed, agreed on, published, resources allocated and supervisors’ incentives based on satisfactory job completion
The Company should have a
published “
1.3 At the $3,000,000.00 level we need to start thinking about becoming full time “managers”, or hiring people to whom we can delegate to do some (most) of the mundane work we have been doing. This is where the 20:80 rule really needs to be applied. (20% of our tasks take 80% of our time, so delegate the other 80%.) Involved in this are office people, project managers, supervisors, etc. But we need to clearly define “our” job in the company and hire people to do the tasks we don’t enjoy doing, don’t do well, and really don’t need to be wasting our time on. This is the point at which many excellent Entrepreneurs “burn out”. The Company is too big for them to micro manage every detail and they either neglect important issues or the stress of trying to cram 20 hours of work into a 10 hour day overwhelms them. One of the key indicators of “burnout” is when the amount of work in progress exceeds the space available, and there are “piles” of paper and objects in the work place. Another indicator is the amount of production equipment that has been bought. When we started we were “lean and mean”, but now since we have all this business, (and income) we have acquired vast amounts of equipment so we “can do what ever they want us to.” Actually, these are buffers for our poor scheduling and our lack of employees with “imperative.” Decisions about the business need some “consensus” to work, since they now affect more people. We cannot offer “knee jerk” solutions. We must consider the future and the “impact” of our decisions.
The accounting system must serve the business with accurate data from which to forecast. We may be bigger than QuickBooks © or Peachtree ©. Forecasting is critical to planning. Break Even reports should be run on every decision over $1000. And planning is absolutely critical. (If you don’t plan where you want to go, any road will do.)
1.4 At the $5,000,000.00 level, delegation is the way of life (no “second guessing” your managers), and the owner is an operations manager, administrative manager, or the sales manager. Job descriptions are concise and functional, employee evaluations are being done every six months and there is an incentive plan in place. Most importantly, divisions (multiple task supervisors) are formed to further divide the scope of authority among employees. In order for a company to reach and maintain this level, the business objectives are clearly defined, the business plan is followed, results are measured repeatedly and variance adjusted for. This is the point at which most businesses begin to become a “legacy”, i.e., have the ability to survive some “bad times” or the transition to new ownership.
1.5 At the $10,000,000.00 the owner becomes a full time manager (or hires one, if he or she chooses to do other tasks). At this point, a more industry specific/customized accounting system needs to be installed, ie. Great Plaines ©, etc. A “generic” system is now not definitive enough. We are reaching the top limits of what a “small business” is. You probably need a “Human Resources Director” to manage your employee programs. You probably also have a full time C.P.A. and good legal council. We must not be managing by “intimidation.”
Your sales department is formally structured, quotas assigned for tasks and revenues, and specific networking assignments are made. Territories are vertical and lateral, meaning that the geographic description is not the only criteria for territory. The management should be retaining “house accounts,” and if you are in an industry where it applies, there is a telemarketing department. This is also the point where we begin to consider certification, either industry certification that requires education and participation or I.S.O./ UL/ CSA, etc.
1.6 At the $50,000,000.00 level a professional manager is hired and the owner becomes an overseer. (I like the title “Chairman”, it sounds so pompous! But seriously, if you have built a company that is producing $50,000,000.00 a year in revenue and returning 5 or more percent net before taxes, you have earned the right to any title you want for yourself.)
The business has probably matured (meaning that you have been in business more than five years and it is growing incrementally and not in spurts.) At this point, the M.B.A. management is desirable, as well as membership for yourself in the Golf or Yacht Club. Your major threats change, and become more subtle. Instead of a bad month wiping you out, minor changes in market place or competition can lower earnings. You have become more of a target for legal action if your “P’s & Q’s” aren’t all intact. You are no longer a “small” business, and can’t think of yourself that way. You are now a “firm” and you may have created a true “legacy” for your family and heirs. You should have surrounded yourself with other smart people and have regular sessions to plan the future of the company. The “Attila, the Hun” model of management will NOT work. Management -by-Intimidation leads to reduced profits and stagnant market place reaction. Management by measured results is excellent. Most entrepreneurs who reach this level begin to “assume” that they are “smarter” than everyone else. Generally false, maybe more clever, maybe more lucky, maybe even richer. But smarter, almost undoubtedly NOT. A strong lesson in humility (but no sackcloth, please) is in order. The S.W.O.T. format is still valid, but it is now used in looking at smaller increments of the future and potential business.
2.0 THE PITFALLS
Entrepreneurs tend to fail or get in trouble for similar reasons. At the same time one entrepreneur is in trouble, another one is starting up (with great expectations) in the same business, in the same area. Failure very rarely has to do with the market place. It much more has to do with how we run our business and respond to the market needs. Generally, “black holes” for entrepreneurs fall into the following:
2.1 Procrastination, we all find reasons for not doing what needs to be done. The usual excuse for not doing work we don’t enjoy is, “I don’t have the time.” I just hate that excuse. Why not say “the dog ate my homework” instead? They are all just excuses for procrastination. (Procrastination means: Not doing what must be done when it should be done)
2.2 Low Bid, as we grow we find that competition gets tougher. Often in order to keep new business flowing in, we lower our price. Every dollar we take off our price comes right out of profit! You always hear entrepreneurs say, “You don’t know how crazy our competition is,” or “you don’t know the market around here,” or “we can be more efficient.” Low bid is a trap that does not support profit or fair wages. If someone is the “cheapest” they most assuredly know what they are worth. You need to determine what percentage of bids you expect to win, and then bid a sufficient quantity to produce the income you need. (It is all arithmetic)
2.3 Can’t see the forest for the trees. This is really a problem of being over whelmed. The skills of the owners do not allow them to recognize and deal with the real issues. In theory, (and ONLY in theory), it is why big companies hire M.B.A.’s as managers, because they supposedly have a deeper pool of information from which to reach critical decisions. There is no “trend analysis”, and no planning for more than a week at a time.
2.4 Being reactive instead of proactive. Responding to crisis rather than planning so we don’t cause crisis. Many (most) entrepreneurs are poor at planning. (How many times have we heard them say, “I’d rather do it than talk about it.” ?) There are “good intentions”, but generally we put off formal planning, meaning that we end up running the business by responding to crisis rather than planning to avoid it. How can we possibly grow if all our time is spent putting out the fires caused by not planning? We are always reacting to the crisis and ignoring the future. This is especially true in “family” owned businesses with “board” control when two generations sit on the board. (Do you have a written 1yr. and three yr. plan, including market forecasts? If not… !)
2.5 Poor cash flow. This is the biggest shame of all, since planning cash flow is so easy, once we know how to do it. Money/Cash needs to be planned on and for, and recorded both in the short term (day by day, week by week) and for the long term (annually, month by month). Only by reacting early to situations that we all know will exist, can we avoid spending huge amounts of time solving cash binds. Most small businesses have no idea what they can “afford” to do.
2.6
Looking for “Band-Aids” Many small businesspeople look for “quick
fixes”. Like somehow “imperative” action
is going to solve long term endemic problems.
While it offers balm to those in command, it in fact, covers the
problems, not cures the problems.
Solutions take planning and time.
If there was a “real” quick fix, it would be an industry standard and
everybody would be doing it already. It
also allows them to say, “I all ready know that,” and avoid the tedious work of
correcting the real problems.
2.7 Budget. Again this is a planning device, but most entrepreneurs spend money when they have it, and try not to when they don’t. While this sounds reasonable, in reality, it doesn’t work. By preparing a budget, recording and comparing variables, and planning for major expenditures can help keep a company solvent for a long time. And the budget looks forward, while the rest of accounting is history. (Mostly to keep your silent partner, the I.R.S. happy)
2.8 Administration. Entrepreneurs as a group don’t like doing paperwork. They tend to work from manila folders and memory. Many trust handshakes and promises for business. They don’t have “time” to do things in detail. Really, they enjoy taking unusual risks and “winning”. Every time they “win” they prove that they can do it better than the “system”, and that is addictive. But it also limits the potential growth of the business, since clients really don’t like dealing with someone who isn’t organized enough to keep them as a top priority. “Forgetting” promises destroys business relationships. And while no contract is really ever worth more than the word of the person who signed it, it does specify an agreement of goods and services to be delivered and the schedule for both receipt of goods and payments. This applies to records, file systems, accounting, and day-to-day documentation as well.
2.9 Can’t stay out of “production”. This is the hardest one of all. We got into this business because we loved it, and as the business grew we got farther away from what we loved. Some entrepreneurs never let go, and they spend time every day working as a production person. Every minute they are doing what a $10.00 per hour employee could be doing, they are wasting the prime asset of the company, themselves. Either that, or they should pay themselves $10.00 an hour and hire someone else at $500.00 an hour to do their real job for them!
2.10 A Venn diagram may help us envision the “Entrepreneurial Company”
4.11 Dr. Steven R. Covey and his book, “The Seven Habits of Highly Effective People” describes some of the behavior required to avoid the pitfalls.
THE SEVEN HABITS:
# 1 - Be Pro-Active
People who are not pro-active, can usually
be found saying, “If we ignore the problem long enough, it will go away.” As anyone who has ever worked in business
knows, if you ignore the problems, (or put a “band-aid” on it) you are
more likely to go away than the problems.
If you can not be pro-active, perhaps the best thing we can do for you
is to help you write a resume.
# 2 - Visualize the end before you begin
This is the law of two creations. If you are building a house, you want a
detailed set of plans on paper, before you turn over the first shovel
full of dirt. Make sure you solve all
the apparent problems, before you make any significant monetary commitments for
expanding your business. Playing “What
if” with the major parts of a business decision (on paper) will help you make
the decision to go ahead intelligently and solve many problems before they
occur. Not following this advice will
cost you both time and money.
# 3 - Put first things first
Dr. Covey developed a chart which shows the
relationship between importance and urgency of any task. He says that everything we do fits into one
of the four quadrants.
All tasks done by everyone fit into one of these
four quadrants:
Urgent Not Urgent
Important I II
Not Important III IV
Dr. Covey’s advice is to spend as much time
as possible working on things which are important, but not urgent (Quadrant
II). This will take the pressure off in
the future, as the “not urgent” things are completed and do not have a chance
to become “urgent. ”Everyone must spend some time in Quadrant I, but if we
spend too much time there, we will find ourselves escaping to quadrant IV when
we have extra time, instead of spending time in quadrant II, as we should for
the good of the business, or your family, or your personal life. Quadrant I is necessary, once in a while, but
very few of us can live under constant pressure, without looking for an escape
(or a “band-aid”.)
# 4 - Think
“Win-Win”
Always try to work out a way that both you
and your customer, both you and your vendor, or both you and your employee can
come out ahead. Win-Win is always better
than Win-Lose or Lose-Lose. In order to accomplish this, you have to approach
problems logically and not let yourself get carried away with your emotions.
There is a place for gut feel in any negotiation, but it should be very private.
If you have negative thoughts in a negotiation, no one should be able to read
those thoughts.
I like to think of negotiations in
philosophical terms of a zero sum game.
The definition of a zero sum game is one in which, if I gain a point,
you must lose a point, or fall behind by one point. Baseball, Football, Basketball, Hockey, and
Gambling are all zero sum games. The
process of negotiations in business no longer should be a zero sum game, the
best sales people will work out a way in which both parties will succeed if the
contract for products or services is signed. The reason the customer came to
you, is that they have a need. If you
fill that need better than anyone else, the customer will not feel bad about paying
you your price, therefore you have a win - win situation.
# 5 - First Understand, then seek to be understood
Unfortunately, listening skills have not
traditionally been taught in schools.
The best way to communicate with someone, especially in an adversarial
relationship, is to understand their point of view. You must learn to listen to the other person,
before you begin to explain your point of view, especially if they are
opposing. When you can repeat back to
them in your own words, what they have communicated that they need out of a
negotiation, you are more likely to get them to listen to your requirements.
# 6 - Use Synergy
If you are a mathematician, your definition
of Synergy is one plus one equals three.
The premise is that two or more people working together can come up with
a better solution than any one of them working alone. To make this work, the relationship must be one of cooperation,
not animosity. Even if two people do not
like each other, they can still cooperate, for the betterment of the company or
the organization.
# 7 - Sharpen the Saw
It takes a long time to cut a piece of wood with a dull saw, and yet you see people cutting with a dull saw all the time. This is usually because they don’t want to take the time to sharpen the saw. It is usually faster to have the saw sharpened or buy a new one, than to cut with a dull one. Once in a while we all have to admit that there are things we don’t know, and that we have to spend the time to increase our knowledge base, in order to become better in the future. This is known as “sharpening the saw.” It is necessary because many people will work harder, because they think it is required to do the job efficiently. They don't recognize that the method they are using to accomplish the task is not the most efficient method, and they need more knowledge in order to “work smarter, not harder.”
5 THE MANAGERIAL MODEL
5.1
Is there really any way, other than sainthood,
for us to grow and avoid the obstacles?
SURE !, and that is why you are questioning the position you are in now
and retained I.P.A. for assistance. It
is moving from the current reactive state to the proactive
one, which is called the MANAGEMENT PROCESS:
5.2
The practice
of management may be divided up simply into the following four steps, which
also will describe the actual process.
5.2.1
Establish
goals and objectives (PLAN) (absolutely critical)
5.2.2
Allocate
resources that are under your control (people) and their time, money, and other
things (equipment).(IMPLEMENT)
5.2.3
Direct the
attainment of the goals and objectives. (OVERSEE)
5.2.4
Measure the
results of your efforts (MEASURE)
5.3
This is a
continually revolving process, a continuous repetition of each step. The task of management goes on and on and is
never completed. Neglected or unskilled
handling of any one of these four steps will lower the effectiveness of the
management job that is being done. This will also result in a waste of
resources and frustration for both the Manager and their people.
5.4
In the
management process there are nine elements that are normally used in the
sequence shown. There is an additional element that affects the continuity of
the managing work performed.
5.4.1
GATHER INFORMATION: The
getting together of information goes on more or less informally all of the time
as a Manager talks with his/her peers, customers, superiors, and subordinates,
reads reports, mail and publications, etc. pertaining to their field or area of
responsibility and any other outside communications media. It occurs more formally when a Manager
purposefully seeks to collect all available data pertinent on a given objective
or problem with which they are concerned.
This is an essential preliminary step to intelligent actions.
5.4.2
SYNTHESIZING INFORMATION: When the
information is complete; or as complete as possible since total completion is
almost never possible, the Manager must use the information that is available
to form an honest picture, or judgment, of the situation, to be used as the
basis for taking action in the allocated time frame.
5.4.3
DECIDE: The decision is the result of
having thoroughly performed the first two steps. The decision results in the selection of an
available course of action, which seem to offer the best possibility to meet
the planned objectives or solve the problem.
5.4.4
ORGANIZE: This consists of determining
the resources (people, money, and equipment), required to accomplish The
Objectives. Once these are determined
and the people are assigned, the Manager organizes the activity or project so
that the objectives are accomplished through the efforts of the people that
they manage. They decide who is to do
each task or phase of the required work.
They strive to maximize these resources with the minimum of waste in the
shortest amount of time or within the allotted amount of time.
5.4.5
COMMUNICATE: The Manager tells their people
what they are to do and in what sequence.
They explain the objective and describe the operation and organization
that is needed to accomplish the objective.
They make certain that everyone understands the work that has been
assigned to each of them. They normally
put it in writing as "the strongest mind is not as strong as the weakest
ink". If an employee does not
understand their assignment, then the Manager is at fault and must accept this
responsibility. They must be sure that
there is a complete understanding, by their people, of what is to be done, how
it is to be done, and who is to do each part of the task. If after explaining it one time it is not
clear then they must redo their job. Clear
communication is a must to maximizing the resources.
5.4.6
MOTIVATE: This is the point where the
"why" or the "what" is to be done is explained. An understanding by all the people involved
is needed to perform this element skillfully.
If the reasons are presented in such a way that the individual can
identify that they are a part of the success of the project, a desire to
contribute to that project usually results.
A Manager cannot motivate people, they can only create the situation in
which they will be motivated. The two
most used motivating factors used by Manager are the "carrot" and the
"stick". Both of these tools
must be used with care as they can cause serious problems within an
organization if mishandled. There is a
third motivating factor that the Manager should try to achieve, the one that
drives an athlete to the point of perfection and beyond their normal
ability. This motivation comes from the
gut and is personal pride of accomplishment.
5.4.7
DIRECT, GUIDE OR COUNSEL: This is
the "how" stage of doing the work.
It consists of a guiding progress though giving instructions,
suggestions, additional data, or by teaching how the objectives can be
accomplished.
5.4.8
MEASURE, EVALUATE, AND CONTROL: The
measurement of performance is necessary for all Managers in order to determine
the effectiveness with which their plans are being carried out. Evaluation takes place, throughout the active
phase of managing as well as when the program or activity has been
completed. The Manager discovers, for
example, what impediments to the progress are developing both through
"hands on management", "eyeball control", and information
communicated to them by their people.
This information, acting on the feedback principle, may be necessary. Throughout and until the end of the project,
these will provide the answers of what results can be anticipated.
5.4.9
DEVELOPING PEOPLE: It is
the responsibility of every Manager to develop their people through
training. A Manager is no stronger than
the weakest person on their staff. A
Manager must get results through others.
It necessarily follows that if all of their staff are adequately
qualified through proper development, the results obtained by the Manager will
be better. In addition to this short
term goal, the Manager has the responsibility for the continuing process of the
work that they direct, whether they are on hand to manage it or not. The lives of many people are affected by the
continued successful functioning of each section of the company. The Manager, therefore, has an obligation to
do what they can to ensure continuity of their entire operation and
organization. They must encourage the
development of those individuals who will succeed them in due time. I.e. Train your replacement, NOW
5.4.10
PROMOTE INNOVATION: A
Manager must be the steady force behind innovation. If a Manager wants their company to progress,
they must never permit themselves, or their people to become
satisfied with the way things are. They
must always strive to stimulate their people to seek better ways of doing their
jobs. The constant search for innovation
should influence every phase of the managing cycle.
6 DIFFERENCES IN STYLES OF MANAGEMENT
6.1 Entrepreneur Managerial
Reactive Proactive
Disorganized Plans and planning
Fly by the seat of the pants Makes decisions based on facts/info.
Owner has a finger in everything Owner overseer (manager)
No consequences Accountability
No assignments Defined tasks and duties
No way to measure results Measurement system
Trust without control Checks and balances
Subjective bonuses Objective incentives
Favoritism “nepotism” Fair to all employees
Company “dies” w owner A “legacy” created
7 CONCLUSION
7.1 The Management model is more “balanced”. Simply, that no one section of the Company requires less of the efforts of the Owner/President to function.
7.2 Adapt to change. In the early 90’s, when the computer came into its own, many accountant, secretarial pool, and middle manager positions were eliminated. Thus came the need to be more efficient in communication between customers and suppliers, between competitors, and between workers and top management. As a result of this, companies found themselves “downsizing”. This just means that in order to survive, owners have had to do more work with fewer employees, to keep their pricing structure low enough to compete in the marketplace. They have been able to successfully accomplish this because of the invention of computers for word processing, spreadsheets, and accounting.
7.3 In order for a Company to thrive once it gets bigger than the Owner, (remember the thresholds) authority has to be delegated
7.4 The Owner has to select the tasks he or she wants to do (or is able to do), and assign the others to responsible, accountable staff.
7.5 There has to be a FORMAL means of communications established. As the following diagrams display, every time you add a person, the lines of communication expand algebraically.
a. b. c. d. e.
