How Delegating Leads to a Higher Company Valuation

If you are like most small business owners, the buck stops with you when it comes to the growth and profitability of your company. And if you serve as the company’s CEO, you might be wearing multiple hats to ensure the smooth day-to-day operation of your business.

While it may seem intuitive to some that the CEO should roll up her sleeves and be hands-on in the daily running of the company, the fact is that too much involvement by the business owner could actually be detrimental to the company’s valuation.

When the time comes to sell your company, you need to be able to offer a turnkey operation where the business can function efficiently and profitability – even when you step aside. But if the company cannot operate properly without you guiding every decision, you are, in effect, lessening the value of your business.

@NAO via Twenty20

The Role of CEO / Business Owner

The CEO, like all other roles in the organization, has a set of responsibilities and expectations that are critical to the success and profitability of the company. These functions are high level and strategic, rather than operational and tactical, and set the tone and the direction for the company.

If you find yourself too involved in the daily core functions, you may need to assess your activities and determine where you can provide the most value to your company. Take a look at the activities below. How many of these areas need your direct involvement to function properly?

  • Sales/Business Development
  • Advertising/Public Relations
  • Customer or Client Management
  • Operations Management
  • Staff Management
  • Project Management
  • Service Delivery
  • Product Development
  • Product Fulfillment
  • Financial Management

The more of these roles that need your day-to-day involvement, the less you are able to focus on higher-level priorities. When you delegate these tasks to capable team members, you are better able to work on your business, rather than work in your business. As the CEO / business owner, the primary focus of your role should entail:

  • Vision Development: The CEO develops the overall vision and mission that guides the company in all activities. In addition to formulating the company’s mission, the CEO is also responsible for communicating it clearly to employees at all levels.
  • Strategic Planning: As external events, trends, and developments alter the business landscape in the market and in the industry, the CEO’s role is to interpret this data and determine how it impacts her company. In addition, the CEO reviews core internal metrics and adjusts plans accordingly.
  • Culture Development: The CEO sets the “tone at the top” and serves as an example to follow for employees at all levels.
  • Leadership: The CEO oversees and evaluates the performance of senior executives.
  • Expansion and Contraction: The chief executive plays a leading role in determining strategic mergers, acquisitions, partnerships, and new location openings as well as significant changes in the workforce, product lines, and company footprint.
  • Board Liaison: If the company has a Board of Directors, part of the CEO’s role is providing updates and soliciting guidance from board members.

How to Delegate Effectively

Learning to delegate effectively starts with the recognition that you cannot do it all on your own. Once you make the decision to delegate, the rest is easy.

Start by making a list of each function that you perform in your business and ask yourself if this is the best use of your time. There may be some areas that you decide to keep for yourself because they fall under your specific expertise or because you enjoy being involved in those processes. Just keep in mind that the more lower-level and time-consuming activities you delegate, the more time you will have to focus on business-growth functions.

Some business owners conclude that they are the only ones in the company who can perform some of these tasks. If this is the case, then how could you ever hope to sell your company? Potential buyers need to know that the company they are acquiring can operate efficiently and profitability when the previous owner is no longer around.

Delegating requires trust. The business owner must have faith that she has surrounded herself with competent people who can deliver results for each of the core functions within the company. And if she is not confident in the capabilities of her current staff, she needs to identify gaps and recruit people who can step in and step up.

Delegating is liberating. Once you let go of the operational tasks that are dominating your schedule, you can turn your attention to the functions that will help your company reach its fullest potential.