As your business grows, so too must your skills as a manager. Most entrepreneurs run their businesses single-handedly at the onset, lone rangers forging their entrepreneurial vision. Occasionally they will hire one or two individuals to help them, oftentimes a spouse, close friend, or other relative. Eventually, in all successful businesses, demand exceeds the capabilities of the entrepreneur and limited staff. Many entrepreneurs assume that the only step necessary to accommodate business growth is to hire additional employees; however, this is not the case. With business growth comes expanded responsibilities as a manager. There is a general misconception that businesses fail because of lack of capital or a bad business idea, but in fact, many businesses fail because of poor management.

Do you know what it takes to be a good manager? Are your management skills solid enough to handle the pressures and changes of a rapidly expanding business? Read on to find out what it takes to effectively manage growth and how you can become a better manager. You might be surprised how management, both good and bad, effects your profits and often becomes the deciding factor in whether your business will succeed or fail!

Implementing Structure

One of the first things you must do as an effective manager of a growing company is to implement a structure of processes and procedures. When you run a small business by yourself, or even with one or two others, it is easy to maintain a relaxed environment with few rules and little structure. If you accidentally sleep in, who will punish you? If you wear jeans and a T-shirt every day to work, who will say otherwise? The rules you make for yourself in business ownership are often loose and undefined; after all, you went into business for yourself to get away from rules and people telling you what to do. While that may work fine for a company of one or two individuals, as you acquire additional staff, you must have defined rules and guidelines in place.

Creating rules and guidelines allows for consistent application of processes and procedures. When your employees know what is expected of them, they will be more productive and more consistent. Procedures you do instinctively every day may not come as naturally to your employees, and must be written down as guidelines to follow. For example, restaurant owners intuitively know what needs to be done to have the restaurant ready for business. Coffee must be brewed, salads prepared, the soup heated, the tables set, and the bar stocked. A new employee may not know all of this, and checklists of tasks and expectations must be written and made available to all employees. Structured assignments and positions ensure that everyone is doing a fair share of work, and everyone is doing the work correctly. It prevents individuals from cutting corners, forgetting steps, or depending on others to do their work.

A regular schedule also helps maintain structure in a working environment. If you are used to working from home during the night and spending only a couple of hours in your office each day, employees may not interact with you enough to get their jobs done right. Your company’s hours of operation can be defined through the creation of an employee manual. An employee manual includes everything your employees will need to know about working at your company, including hiring procedures and policies, the dress code, paid vacation days, holidays, rules for sick leave, and severance policy. Having an employee manual protects you and it protects your employees. It is a critical piece of any business, and employees should be required to read the manual and sign a form saying they have read it and that they understand the policies of your company.

Another way to create structure in your work environment is to create job descriptions and standard pay levels. Doing this will eliminate confusion as to each person’s role in the company and erases divisions that might arise from uneven pay levels. Promoting equality from the beginning will foster transparency in your procedures and make everyone in the company, yourself included, more comfortable in discussions and interactions.

Every employee in your company should be reviewed regularly in terms of his or her performance. Performance reviews are generally given every six months and compare how well the employee performed against his or her job description and objectives set out at the beginning of the review period. A helpful tip when conducting performance reviews is to make sure they are 360 degree reviews; in other words, don’t be afraid to let the employee review your own skills as a manager. By giving and receiving constructive comments, you will build the respect of your employees, demonstrate you are committed to being a great manager, and sharpen your managerial skills. In large companies, performance reviews are often the impetus for salary raises and/or promotions. Even if you cannot afford to implement raises or promotions, performance reviews are an important step that should not be ignored. Providing your employees with feedback as to what they are doing well and what they can improve will help them become better at their jobs and, in turn, become more productive employees for your business.

Employee Management

Creating structure is only one critical part of good employee management. The way you treat employees is another demonstration of your strength as a manager. Effective management means getting things done through the help of other people. It means learning to delegate work and assign responsibility to other people. Many entrepreneurs who have been solely responsible for the products and services of their company are hesitant to do this, and the excuse is commonly heard, “If I want something done right, I have to do it myself.” The simple truth is that you cannot do everything by yourself, and you need to learn to trust your employees. Become a mentor to them, and provide comprehensive training that will ensure they know how to do the job right. They will be more confident in their abilities, and you will be more comfortable leaving work to them. Oftentimes managers are hesitant to train their employees for fear the employees will be better at the job and will replace the manager. In fact, a good manager is constantly training his or her replacement. How else can you get promoted, or—in the case of entrepreneurs—focus on more high level tasks, such as developing partnerships and attracting new business, if you are constantly doing the mundane tasks you could easily train others to perform?

If you are still wary about leaving important work to employees, do so in small steps. Instead of leaving the entire production process in their hands, make them responsible for portions of it, while you remain in charge of the final steps. This will still free up your time while maintaining your control over the quality of your products. Also make sure you are hiring the right people. In “Starting a Business”, we discussed hiring employees for their skills rather than hiring for convenience. Click here to review the most common mistakes entrepreneurs make. The same is true as you grow your business. Hiring highly skilled people you have confidence in will save you the headaches and frustration of hiring convenient employees who do not know what to do.

Finally, work hard to maintain the morale and boost the spirits of your employees. Motivate and encourage your employees to do the best job possible. If you cannot offer raises or promotions as incentives, give them more important responsibilities. Reward them for good work by increasing their independence, involving them in important decisions, and making them part of the team. Employee involvement will make everyone feel as though he or she is part of the company’s future, and will encourage the entire staff to stay committed to achieving results.

Establishing Standards

You set the tone for how your business is run. You not only set an example in the way you dress and the manner by which you conduct business, but you set an example by the moral standards and ethics you follow. Defining your company’s values, which are often ethically based, is an important step to maintaining a positive, respectful working environment. Click here to review how values are an important part of your company’s strategic plan.

It may seem obvious to you to follow high ethical standards, but it is not so to everyone. Look at the volume of current news stories depicting a lack of business ethics. From insider trading, to corporate scandals, to employee theft, American companies are becoming increasingly accountable for their lack of ethical standards. Following ethical standards is more than making sure your actions are legal; it means making sure your actions are right, and sometimes those are difficult decisions to make.

Here is an example:

You tell one of your employees you are planning to promote her to Vice President of your company. At a business conference you attend, you meet a woman with years of experience and a track record for creating high growth within companies. She tells you she would be interested in becoming Vice President of your company and making GloWipes the leading napkin product in the United States, and she tells you the ideas she has to achieve that goal. She would be perfect for the position, but you already told your current employee she would be promoted. You can’t have two Vice Presidents, so what do you do?

Although you would not be doing anything illegal were you to hire the outside woman over your own employee, you have to consider whether or not it is right to do so. Is it fair to both parties? If the same situation happened to you, would you feel it right having someone brought in above you? Perhaps the right decision is to promote your employee to Vice President at a salary level slightly lower than what you had initially intended, and hire the woman you met at the conference to serve as a consultant to your company. It is a win-win situation, fair to both sides, and may be the best ethical decision. Sometimes the most ethical decision may not be feasible due to costs or other factors. That is what causes the gray area in ethical decision-making. Oftentimes arguments can be made to both sides of a dilemma, and this is when you must look at the big picture and try to determine whether what you are doing is respectful, fair, and right.

Knowing When to Lead

The terms “leader” and “manager” are often used interchangeably, but in fact they are two separate things. Good business owners must learn to be leaders and managers, and must learn how to balance the two. Leaders must instigate change, get people excited about a new idea, take the company in new directions, make decisions, and envision the future of the company. Managers, on the other hand, must maintain status quo, create stability within the company, and focus on the current tasks at hand.

Business owners who are only leaders and not managers can tend to overlook everyday details and the minutia of what must get done to achieve goals. Leaders instigate new directions and come up with new ideas, but don’t always do enough to adapt the rest of the team to the change. Managers, on the other hand, worry about the current status of the company, and focus on the tasks that must get done everyday. They do not often see what needs to change in order to make things better, nor do they spend their time brainstorming new ideas and initiatives. A business is a blend of the status quo and looking to the future. Entrepreneurs must therefore be a blend of leaders and managers. Look at what kind of personality you have. Are you a manager or a leader or a little of both? If you lean too far to one side, try to incorporate other elements into your entrepreneurial style.

For additional help in preparing your business plan and launching an entrepreneurial venture, check out TVC’s Veteran Virtual Business Incubator, a one-stop resource for Veteran entrepreneurs!