Many small businesses are started by a founder or founders who perform all of the tasks of the business. They do everything and then some, from conceptualizing and creating the deliverables to sweeping and mopping the floors. Sooner or later, “doing everything” can become a constraint to growth; in order to move forward, some work will have to be delegated.
Successful delegation of tasks will ultimately determine the financial success of many organizations. There are several factors owners need to take into consideration.
The Key Task Line
For any small business, there is a key task line consisting of those tasks that are essential to the creation and delivery of the product or service. These are often what drew the entrepreneur into the business in the first place, their passion for the product or service and their ability to provide value.
The key task line includes the marketing and sale of the product or service the business provides.
This work may ultimately need to be delegated, but in many cases should only be done so once the business is up and running. If anything doesn’t work out well with a key task, the business suffers. There is more risk in delegating key tasks than there is in delegating routine tasks.
The Financial Question
Delegating is ultimately a financial question. There are two criteria that are commonly suggested in business writing: The first is to delegate what you can hire someone to do for less than your hourly rate; the second is to delegate what you do not like to do. Both of these suggestions have problems.
The suggestion to delegate what you can hire someone for less to do neglects the key aspect, that doesn’t always put you ahead financially.
It will put you ahead financially only if you are actually increasing the time you are doing things at your hourly rate by delegating to someone else. The financial question shouldn’t be to compare your typical rate to the rate you would have to pay to have the task done, but rather the rate you would earn during the time freed up from doing the task.
For example, let’s say you are a small business owner who spends an hour or two at the end of each day cleaning up your storefront.
You make about $100 per hour while you are open, so you figure if you can get the cleaning done for less than that, the conventional wisdom is that you should do so. But you aren’t giving up sales to clean, you’re cleaning after you close.
You will not increase your revenue, in this case, by subbing out the cleaning. Maybe you can afford it and it will give you more time at home, and that could be worthwhile. But it is going to cost you money, not make you more. The relative rates that you earn and the cleaner earns are irrelevant; you are not using your freed-up time to make more money.
To compare the cost of delegating work you have to compare the cost of hiring someone to do the task with the additional income, if any, you would make with your freed-up time. That is the only meaningful financial comparison.
The second suggestion is to delegate those tasks you do not enjoy. Certainly you would want to do this in the long run, but it could be a costly place to start. Early-stage businesses often need their founders to be hands on with key tasks. Everything else is open for delegation. Some key tasks can be delegated, but this needs to be approached with caution.
Remember, there is a risk in delegating key tasks that is not present in delegating routine tasks. If you hire the wrong person to do your sales, it could be catastrophic; hiring the wrong person to sweep has lesser consequences.
Many small businesses have a window of opportunity each day in which to market and conduct business, the times when their customers and potential customers can be approached.
For example, if your small business provides goods or services to other small businesses you can do your sales and marketing activities during times when other businesses are typically open. You would be limited, in general, to normal business hours.
This is your money time, or green time, or whatever moniker you care to assign, but the time when you should be engaged only in customer facing activities.
If routine work is eating into your money time, then you should consider delegating them. You shouldn’t be sweeping or filing during times you could be seeing or approaching customers. If your business needs you to see customers to make money, this is the only thing you should be trying to do during your money time.
Some businesses don’t have this constraint. You may run an online store or do some other activity that doesn’t require you to be continuously seeking customers. In this case, your money time equivalent may be in preparing and shipping packages, or otherwise completing deliverables.
The key is not to let nonessential tasks interfere with the essential task of generating revenue. If nonessential tasks are getting in the way, then they are strong candidates for delegation.
Cautions for Delegating
There are two common mistakes that tend to be made by those new to delegating work.
One is micromanaging. I know, that wouldn’t be you. It is, however, a common problem. An owner delegates a task and then hovers over the person watching every move and correcting them continuously. The result is that neither gets much done. Make sure they know what they are supposed to do and then walk away. This leads into the second problem.
The second problem is a tendency to want to hold people accountable to process rather than results. In some cases process is essential; in most cases it is not. If you are hiring someone to file or sweep or do some other routine task, it is the result that matters and the result is what you should hold your help accountable to.
If you rigidly define the process, then it is your result, not theirs.
If you are clear about the result and let them take a reasonable approach of their liking, then they are accountable for the result. You can’t have both; you can hold them accountable only for what you give them the freedom to accomplish.
The Bottom Line
Delegating work is an exciting and important growth step for many new businesses. As many new businesses are also cash challenged, it behooves the business owner to approach delegating cautiously and prudently. By delegating the right things, you can free up time to increase revenues and grow the business. Delegating is, after all, a financial tool.