Designing the Business You Want to Become
If a client tells me they want to double the size of their business over the next three to five years, one of the first things I want to understand is what they think that business will actually look like.
Because a £5 million business is not simply a £2.5 million business doing twice as much work.
A £10 million business is not just a £5 million business serving twice as many clients.
The same applies if you are talking about growing from five offices to ten, or from 1,000 managed properties to 2,000.
Because at each stage, the shape of the business changes. It has to.
Responsibilities change. The management structure changes. The demands on the leadership team change. Systems and processes need to change, perhaps software, maybe even hardware.
And, perhaps most importantly, the role of the business owner should change too.
Which is why, when I work with clients on their plans for growth, I place so much emphasis on looking not just at where the business is now, but at what its organisational structure currently looks like, compared to what it needs to look like in the future to handle the change the client has in mind.
However simple and straightforward this might sound on the face of it, it can turn out to be one of the most revealing exercises an owner does.
Start with the business you’ve got…
There are a thousand books out there which can help you look at your business and scrutinise it, analyse it and challenge it – and there are several I refer to when working with my clients. One in particular that comes to mind is Michael Gerber’s The E-Myth, and one particular exercise that is a really useful place to start.
Draw the organisational chart for the business as it stands today – labelling the roles and responsibilities that exist within the company the way it is structured now, but not the names of the individuals who fill those roles. Think about the roles, not the person, because you may well find that the same person’s name fills various positions.
For example, CEO, Operations Director, HR, Chief Financial Officer, Chief Marketing Officer, Business Development Manager, Key Accounts Manager, Head of Sales, Head of Lettings, Head of Property Management… etc.
It is important not to note the name of the person because you can miss the fact they are doing two, three, four roles (etc.).
Once you have mapped the roles, then start putting names against them.
For an owner-managed business, this can be quite an eye-opener.
The owner’s name might appear five or six times.
That is not necessarily a criticism. In the early stages of a business, it is completely normal. Founders often have to wear multiple hats because the business simply cannot justify employing a separate person for every function.
In fact, if you are the founder of your business reading this, do you recognise yourself being described here? Are you also in charge of marketing decisions, heading up sales or lettings (or both), handling HR, handling finance and accounting?
That is absolutely normal, but if you scale up – if you really are going to double your business – can you realistically spin all those plates?
There comes a point in many businesses where it all stops being entrepreneurial flexibility and starts to become a constraint on the business’ growth.
You may think you have one job, maybe a couple – but your organisational chart might tell you that you actually have six.
Once you can see that clearly laid out in front of you, you can start asking which of those jobs you should still be doing now, let alone in three, five or ten years’ time.
Begin with the end in mind
Another firm favourite of mine – and I really do come back to it again and again when working with clients – is Stephen Covey’s 7 Habits of Highly Effective People, and in particular the second of his Habits: begin with the end in mind.
Before you can design the organisational structure of the future, you need an idea of what you are trying to build.
Where do you want the business to be in three, five or ten years?
What will that turnover look like?
How many offices do you expect to have?
How many clients, managed properties or instructions will the business be handling?
How large will the team need to be to handle that?
But there is another question which is just as important: What do you want your own role to look like?
Do you still want to be running the business day to day? Do you want to move into a more strategic role? Do you want somebody else running operations? Do you want to spend more time on growth, acquisitions or key relationships?
Especially important: are you ultimately building towards an exit?
Two estate agency or letting agency owners might both say they want to build a £10 million business, but they could need very different organisational structures depending on what they personally want from it.
That is why growth planning isn’t just about a turnover or, better yet, a profit target.
Instead, you need to design the organisation around the business you want to become and the role you want to have within it – because turnover and profit are not simply targets in themselves: they are outcomes of the organisation you build and, particularly in the case of profit, what gives you the capacity to invest in the next stage.
Map the future structure
Once you have drawn out the organisational chart as it exists today, draw another one.
This time, I want you to map out the structure of the business you expect to have in three to five years. Maybe that now includes a Marketing Intern, a Social Media Manager and a Marketing Executive, all reporting to a Marketing Manager, who reports to a Chief Marketing Officer, who reports to a CEO. New roles you don’t have in your chart right now – because that may be the sort of capability required to support the target of 1,000 listings per quarter you plan for the business to be doing then, once it has become a ten-office network.
This is your plan, so all that is for you to decide – the point is, think ambitiously but pragmatically about what that future needs to look like structurally in order to achieve it.
Again, leave the names off initially.
What roles need to exist? In the example I have sketched out above, a business that is currently a single branch, or even a two or three branch operation, probably doesn’t have quite the need for that structure of marketing team. That is not to say they definitely don’t – but even if they do, then what does a future marketing team look like to grow to whatever they plan to grow to.
In other words, this is about looking at what management layers need to be in place, where responsibility sits, which functions are currently combined but will eventually need separating to allow the business to drive forwards.
A business even up to five or six offices might be able to operate with a relatively flat structure.
At ten offices, that can become much harder, maybe requiring a bit of regional management in a way that a five-office structure did not.
Likewise, managing 1,000 properties is likely to be very different from managing 2,000.
At some point, as well as regional management, you might need additional operational leadership, a specific finance capability, a dedicated people function or more specialist support. Perhaps it can be outsourced. Perhaps it really wants to be in house.
The purpose of this exercise is not to create unnecessary hierarchy. It is to work out what infrastructure the business will need before growth exposes the gaps.
The gap between the two charts is your plan
Once you have your current organisational chart and your future one, put them next to each other.
The difference between them is what now begins to inform your people plan.
In determining this, you can now also think about which responsibilities need to move away from the owner, and which members of the existing team could grow into larger roles, allowing you to ask the question: where might training or development be required?
Because that is important. Not every gap represents a new hire: some could be filled through development of existing team members – or, in our modern economy, through delegation, technology, outsourcing or perhaps even redesigning the workflow.
Nevertheless, one way or another, you will probably need to look at which positions will eventually require external recruitment, and at what point will those roles need to be introduced.
This is where recruitment or talent acquisition becomes much more strategic.
Instead of reaching overwhelm, you can now start anticipating when the business will need additional capability.
It does not mean employing everybody on your future organisational chart tomorrow.
It does, however, potentially mean knowing what the trigger points are going to be.
For example, if you are planning to double the size of a managed portfolio, at what stage will the existing management structure stop being effective? How many properties can one property manager handle? For example.
If you plan to acquire another two branches, what leadership capacity needs to exist before you do it? Is it just a couple of Branch Managers? Or does it now mean bringing in a dedicated Area Manager – or promoting a key individual in your existing team to that role?
It is much easier, more efficient and more effective to have these conversations before pressure forces the narrative.
This is also where someone like Nicola, who heads up the Recruit arm of 2point0 Group, can add real value from a recruitment perspective. If you know the business you are trying to create, you can both plan for and then recruit for that future, rather than simply reacting to problems or gaps in the moment.
The owner’s role has to change too
One of the biggest challenges in scaling any owner-managed business is accepting that growth usually requires the owner’s role to evolve.
You cannot build a substantially bigger business while continuing to be the person who approves every decision, solves every problem, wins every major client and gets involved whenever something goes wrong.
You become a bottleneck – and at some point, something has to give.
The aim of this is not to simply create more people underneath you as the owner. It should be to build a structure that allows decisions, responsibility and accountability to sit in the right places – whether that involves you or allows you to step away from operational matters.
Different owners have different ambitions, in that regard – but, if you build a company where every important decision still comes back to one person – whether that’s you or an appointed CEO or MD – you have probably not yet built a scalable organisation. It would sound more like you have simply built a larger business built around the same bottleneck.
And that makes it vulnerable.
Growth, acquisition and exit
Whether your ambition is organic growth, acquisition or eventual exit, the thought process behind mapping out your future organisational chart is really critical.
If you are acquiring another business, you need to understand where that business fits into your existing structure.
If you are growing organically, you need to know what support will be required as you reach each stage.
And if you are ultimately preparing for exit, then building a business that can operate successfully without being completely dependent on the owner becomes even more important.
We have written previously about why growth still matters when preparing a business for exit (see that article here).
Part of that is creating an organisation where value sits in the team, the systems, the processes and the structure, rather than solely with the individual who founded it.
The organisational chart is a simple tool, but it can help make that much more tangible.
So: Draw the business you have today. Draw the business you want in three, five years or ten years.
Leave the names off both to begin with.
Then ask yourself this:
What needs to happen to get from one to the other?
The answer isn’t just about the organisational structure. It should also tell you what level of business needs to be generated to justify that structure, what capabilities you will need along the way, and the profile of the people required to fill those roles.
But now you can see the gap, you can start to determine what you need to do to bridge it.
