The three levels of ownership

Departments - Cream of the Crop

Steven Cesare classifies the three levels of ownership is entrepreneur, owner/operator and businessperson.

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August 31, 2020

Cream of the Crop features a rotating panel from the Harvest Group, a landscape business consulting company.

A business owner from Colorado called me the other day to talk about various human resources issues. As the conversation unfolded, he revealed how overwhelmed he was with everything going on in his company: sales, customers, employees, vendors, lawyers, government agencies, banking, social media, recruitment, being a role model for the organizational culture, etc.

With that much going at work, I am sure he has just as much action going on with his family, his extended family and himself.

I explained that he has to understand there are three levels of ownership. Distinct from the three levels of leadership (e.g., supervisor, manager, leader), the three levels of ownership are entrepreneur, owner/operator and businessperson. To be optimally successful, adept owners proceed through that hierarchy steadily. Failure to do so stunts both the owner and the organization’s growth.

Entrepreneur:

This level of ownership is prevalent during a new company start-up, working out of a house or garage, coupled with big dreams and limited resources, naively enthusiastic about the future. Establishing new accounts, meeting new customers and business partners, chasing revenue at the expense of profit and operating on a shoestring budget underscored by what must be done today. Despite the stress, uncertainty, competitive market forces, the entrepreneur’s excitement fuels more adrenaline that stimulates hope, optimism and dreams. Based on sheer will, and admittedly a little luck, the company and the owner can grow past this level.

Owner/Operator:

Now with the novelty gone, this level of ownership is the most widespread, characterized by a Jack of All Trades mentality with the owner primarily responsible for sales, estimating, customer service, employee selection, contract administration, accounting, insurance programs, field operations, fleet and equipment maintenance, human resources, safety, snow, and of course information technology. Most owners get to this level, get stuck, and stop growing; working 65-75 hours a week, 6-7 days a week. Sound familiar? Lacking a business plan, bereft of awareness and relying only on oneself, the owner/operator assumes more responsibility each year, failing to get over the hump, with the treadmill winning more and more with each passing day, never realizing the issue of self-impediment.

While your business continues to grow, the level of ownership changes as you learn to delegate.

Businessperson:

Blessed with insight and motivated by value, this level of ownership is characterized by the ability to put people, programs and processes into place; replacing the single point of failure model endemic to the owner/operator with a systems view that the pieces of the business are supposed to work cohesively. Having a business plan based on the Balanced Scorecard keeps the goals clear; hiring key employees to become accountable for the specific business functions (e.g., sales, estimating, accounting, IT, human resources, customer service, operations), and holding them accountable each month for achieving stated goals; and most of all, delegating responsibility to the employees knowing they will make mistakes all the while coaching them to improve next time. Building the team through a systems model gets the businessperson to win the race instead of stumbling along on the owner/operator treadmill.

With that framework in mind, I told the Colorado owner/operator to develop an 18-month organizational chart and a tandem 18-month forecasted P&L. We then highlighted and prioritized those key business processes as a set of key initiatives, thereby drafting the plan that he and his team were accountable for achieving. I also told him to work no more than 50 hours a week; and after three months, to take off one Friday each month, to show him that the company system can operate without his hand tightly gripped on the steering wheel.

While still making progress, to date, he and his team are much more empowered, satisfied and successful than ever before. It takes time. It takes a team. The plan works.

Contact Steve Cesare at harvest@giemedia.com