How Many Hats Do Small Business Owners Wear?
Are you a skilled worker that feels like you could be earning more by quitting your job and starting your own business?
I work with many software developers in Pakistan and Pakistan has a booming Information Technology industry. At some point in their careers, many software developers and other skilled workers start to wonder if they could earn more by starting their own business. Indeed the appeal of being your own boss is a tantalizing thought. Better yet, the idea of all the money your skills generate going to you and not a company is also attractive.
I by no means ever wish to discourage anyone from chasing a dream or striving to improve their lives. In fact, I’m all for it. Everyone should fulfill their God-given potential and everyone has a right to pursue their goals. In fact, when employees come to me and say they wish to resign so they can start their own company, I say bravo and wish them well. However, I do like to give them something to think about before they pull the trigger.
The first thing I ask them is, did you write a business plan or at least make an investor pitch deck? Most people say no to this question, and I immediately tell them they need to accomplish this before doing anything further. The reason is that writing a business plan or an investor pitch deck forces you to think deeply about the business you are about to start. Writing down all of this information will serve you well during the first few years of your business as it will keep you focused and you will be better prepared to handle risks and problems as they arise. Some of my employees accept my advice and then take back their resignation while they work on their business plans. Others throw my opinion to the wind and resign anyway. I can count two times when ex-employees re-applied to our company six months later because their businesses had failed and they had lost all of their savings. Building a house without a set of plans will most likely end up in disaster, and it is the same in business.
Further questions I ask them: “Do you have a clear idea of what it takes to get customers or clients?” “Who is responsible for getting those clients?” “Who is responsible for marketing?” If they say they will get clients, I then ask them, “Who will do the work that the clients paid to get done?” If they say, “I will”. I immediately stop them. I explain to them that they will need to wear many hats in their organization and if they are the one doing all the work ordered by clients, then who will wear the other hats.
List of Hats Every Small Business Owner Wears
Chief Executive Officer Hat
As the CEO of the company, you are responsible for every aspect of the business. All departments report to you. As a CEO it is your job to:
1.) Strategize the direction of the company.
2.) Make sure department heads remain aligned with company values, culture, and company goals.
3.) Monitor department heads and coach them to do better if necessary.
4.) Keep an eye on financials and seek funding if necessary, plan and budget for expenses.
5.) Keep the company headed in the right direction without too many deviations that could distract.
Chief Financial Officer Hat
The CFO is responsible for all things financial. While wearing this hat the business owner has to save money everywhere possible. This person is always telling people no they can’t have this beautiful computer, no they can’t have that standing desk. It’s their job to keep the bottom line financials as healthy as possible, and the only real way a CFO can do that is to keep expenses low.
Chief Marking Officer Hat
The CMO is responsible for all things branding. They have to write the articles on the blog, do press releases, schedule content releases on social media platforms, and they can’t ever stop. When you cease being active on social media, your brand dies.
VP of Business Development
Businesses die if they don’t get new sales in the door. Each business has to have a nice funnel of new sales opportunities to chase, and someone has to pursue them. Sales is a constant battle of finding leads, nurturing leads and closing leads and guess what? It takes time! So if you are starting out in a new venture, make sure you devote half your time to sales.
Chief Information Officer Hat
The CIO, keeps all the computer equipment running in the office that is necessary for business operations. If you don’t know how to network computers and restore a computer from a crashed hard-drive, then you’ll need help. Else you will spend days trying to figure it out. While you are trying to figure out why the printer won’t work, nobody is closing leads.
Chief Operations Officer Hat
The COO is responsible for product delivery or successful rendering of services. They write the processes and systems that people must follow to accomplish the company’s objectives. This job is a time-consuming job to say the least, and it takes a person that possesses the right personality to boot. You need a well-organized individual that loves processes and systems to head this post. If this isn’t you, then look out below. Businesses without systems and processes come unglued in a short amount of time.
VP – Human Resources
This person is responsible for all things regarding employees. Whether it’s training, orientations, discipline or keeping track of vacation days, human resources are essential to all organizations that have employees. If you have only one employee, it’s not a huge deal, but get over five or ten, you’ll need help, even if it’s part-time.
If you business is small and you are the only one in it, then you will also be the one to perform all the work. This means countless hours each day spent in trying to live up to client’s expectations of high quality and tight deadlines. This is where so many small business owners get into trouble. Their boats sink under all the weight.
As you can see, there are so many hats a business owner must wear. I do not discourage anyone from trying to be a business owner. However, I do discourage those that think it will be easy to maintain a steady customer base while they perform all the work ordered by a customer.
There are two main reasons why nearly 90% of all small businesses fail in their first two years.
- Lack of planning up front, no business plan or investor pitch deck.
- Skilled workers starting businesses without realizing how hard it is to wear all the hats above while doing the “work”.
My advice is, if you are a skilled worker and want to start your own business, you need a business plan first and foremost.
Then seek a partner that is skilled in areas you are not. If you are the programmer, find a partner that is a sales professional. Join forces and start building from there. Make sure your partner has demonstrated success in doing his role before you commit and make sure your personalities match. Business partnerships are difficult to keep together if two personalities conflict from the beginning.
If you can afford to hire someone to fulfill roles you do not want to do, then I suggest you hire someone instead of partnering. When you partner, you give away a portion of your business. If that business becomes ultra-successful, then that partner cost you way more than an employee would.