Ten years ago, after I had been in business for a few years and was really struggling as a small business owner, I read a couple books that literally changed my life:
- The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It, by Michael E. Gerber, and
- Becoming a Strategic Business Owner, by Daniel M. Murphy.
At the time, I was a commercial real estate appraiser — a professional “technician” — operating under a sole proprietorship, doing business as “Cummings Appraisals”. (Notice the inclusion of my surname in my business name. That is a classic tendency for first-time technicians-turned-small-business-owners: include your last name in your business name. Hah!)
A “Jack of All Trades”
In the early days, I was my business. I had no employees. I did everything! I did the marketing. I received, researched, and bid on all of the request for proposals (RFPs) that came in. If I was lucky enough to win an award, I was the one who processed it. Of course, as the sole appraiser in my little, one-person business, I also ended up performing the appraisal. I had no help, no assistance. I did everything.
I researched and inspected the subject property. I researched, verified, and inspected all of the comparable properties used in the appraisal. I did all of the appraisal analyses and report writing. When I finished the appraisal, I would take off my Appraiser Hat, put on my Reviewer Hat, and then I would review my own appraisal report. I would then create and email a PDF of the final appraisal report to the client.
I would also print off, punch and bind, and Federal Express hard copies of the report to the client along with an invoice that I would create. When I received the check from the client, I would be the one who would fill out the deposit slip and take the check to the bank. I would then enter all of the financial information in the accounting software. Like I said, I was my business.
The Need for a “Paradigm Shift”
And my business was killing me! Or, perhaps more accurately, I was killing myself! Or to be even more specific, my mindset was killing me! You see, at the time, not knowing better, I had a Technician Mindset not an Entrepreneur, or as I like to call it, a Strategic Business Owner/CEO Mindset. As Gerber shared in The E-Myth Revisited, because I had been a really good, fairly successful commercial real estate (CRE) appraiser, I thought (mistakenly) that that qualified me to be a successful CRE appraisal business owner. Nothing could be further from the truth! What I really needed was a major “paradigm shift”!
Here I was, trying to do everything in the business myself. My corporate ladder was an old, broken-down, wooden ladder that was lying on the ground, and I was standing on every rung! I had no help. I was working 12 to 14 hours a day, six and seven days a week. I had no life. My work consumed me. I was stressed out, burned out, uptight, and not too fun to be around most of the time. The only reason my marriage didn’t fail is because my wife had the patience of Job!
Don’t Ever Give Up and Quit!
An important note here. I didn’t quit! I wanted to. I could have. But I didn’t. I hung in there. I persevered. And, I was willing to read a few books and learn from others who knew more than I did. I was open to leveraging the wisdom of other successful business owners who had come before me. I was open to their wisdom and direction.
Moving from Technician to Entrepreneur
Back in those early days, I had no idea what it took to successfully run and manage, let alone scale, a small business. However, as I took the time to read, re-read, and reflect on these two books written by Michael Gerber and Daniel Murphy, something started to change inside of me. I realized that in order for my external work life to change, I had to change my inner work paradigm that existed in my head.
Gerber taught me that there are three types of business mindsets:
- Technician – The technician’s work is primarily tactical in nature. The technician does the work of the business, being directed by the manager and following the guiding structure of the company’s business systems to get the work done. The technician’s focus is on the present and getting their defined hands-on work done.
- Manager – The manager’s work is both strategic and tactical. The manager is responsible for developing and improving documented business systems for the company’s main business processes. The manager’s focus is also the present and achieving results via their technicians who operate the company’s business systems.
- Entrepreneur – The entrepreneur’s work is primarily strategic in nature. The entrepreneur’s focus is on the future and developing their vision for how the company will fulfill the needs of its clients, employees, and shareholders. The entrepreneur spends the bulk of their time working on the business rather than in the business.
Climb Your Own Corporate Ladder
After reading these two books, I realized that I needed to build and then climb up my own corporate ladder. And not some old, rickety, broken-down, laying-on-ground corporate ladder, but a new, modern, super-strong-alloy corporate ladder that was leaning against the right wall! I realized I needed to change my mindset from that of a technician working in my business to that of a strategic business owner working on my business. And that is exactly what has enabled me to grow our firm to 15 full-time employees with revenues well over the seven-figure range.
So, how did I go about doing this? First, I created an organization chart on paper which had a box for every major function in my business. My org chart ended up looking like all of the typical pyramid-shaped org charts you’ve seen with the leader (CEO) of the organization at the top, the managers in the middle, and the technicians towards the bottom. It ended up being organized something like the following outline:
- CEO (Strategic Business Owner):
- Administrative Manager:
- Administrative Assistant
- Bookkeeping & Accounting (Vendor)
- Human Resources (Vendor)
- IT Managed Services (Vendor)
- Marketing & Recruiting Manager:
- Bidding & Appraisal Coordinator
- Recruiting Assistance (Vendor)
- Marketing Strategist (Vendor)
- Copywriter (Vendor)
- Graphic/Design (Vendor)
- Appraisal Manager:
- Senior Appraiser/Director
- Senior Appraiser
- Appraiser Trainee
- Real Estate Analyst (Appraisal Assistant)
- Administrative Manager:
I then put my name in every box underneath the function or position title. My goal now was to start documenting each of these functions and then hiring and training my replacements based on these documented business systems.
Hire, Train & Move Up in Your Company
My first hire was a full-time employee who doubled as both my Appraisal Assistant and my Administrative Assistant. I made it clear to her from the get-go that her primary job was to document everything she did as I trained her. So, she started the process of documenting individual work tasks by writing up what we called Standard Operating Procedures or SOPs for short. (Note: We now have over 500 SOPs which document virtually all of the main business functions or processes in our business!)
My next hire was my first staff Appraiser, who also helped me implement our narrative appraisal report writing and comparable database system. Soon we added another staff appraiser, then another, and then another. At this point, I started appraising less and managing more, out of necessity. I now had employees!
We then started implementing my vision of a leveraged support environment for our staff appraisers by hiring our first Appraisal Assistant (now we call them Real Estate Analysts). Our little appraisal firm was starting to grow!
As You Grow You Will Need New & Better Systems
As we started to grow, I realized that the systems needed to run a one– or two-person company are not the same that you need once you’ve grown to six to 10 employees. So, we added better accounting software and an Assignment Management System (AMS) that I hired a developer to build for us in QuickBase, a relational database platform owned by Intuit, the makers of Quicken and QuickBooks.
Reaching the Top Rung
We continued this process, hiring and training new hires with our documented business systems until I had filled almost all of the boxes on our organization chart. And, before you know it (well, actually several years later), I finally had a real company on my hands with qualified, well-trained employees who did the bulk of the tactical and managerial functions of the business, leaving me to focus as the Strategic Business Owner/CEO on the vision and strategy for the business. I was finally free to focus most of my time and energies working on the business rather than slaving away like a wild man working insane hours in my business!
Before and After my Paradigm Shift
Compare my early days in business, having to do everything in my business myself, with my reality today…
- Marketing – Most of the marketing is done by a full-time Marketing & Recruiting Manager, who does all of the main lead generation and lead conversion activities, and also coordinates the marketing efforts of outside vendors who help with marketing strategy, branding, messaging, copywriting, press releases, graphics, and design. All told, there are five on our marketing team, including our in-house Marketing Manager. My role in marketing today, as Chief Rain Maker, is limited to attending various networking functions and meeting with key clients.
- Bidding & Appraisal Coordination – I now have a full-time Bidding & Appraisal Coordinator who does virtually 100% of the bidding on RFPs for our firm. When we win an award, he double checks the award/engagement letter with his bid for consistency and works with our Director of Finance & Administration to process the award and log it into our Assignment Management System (AMS) in QuickBase. He then assigns the appraisal job to one of our staff appraisal teams and works closely with them and the client to ensure that all of the required data is received properly, that the property is inspected in a timely manner, and that the entire appraisal process goes smoothly for an on-time or, better yet, early delivery.
- Appraisal Services – Today, instead of just me being the sole appraiser, we have seven other commercial real estate (CRE) appraisers, including one who is an MAI-designated member of the Appraisal Institute like I am. We also have four appraisal support staff, including two Real Estate Analysts and two Appraiser Trainees, for a total of 11 professional staff in our Appraisal Services Department. Except on very rare occasions, I no longer act as an appraiser in our firm.
- Appraisal Reviews (Quality Assurance) – Instead of having to do all of the reviews myself, I now have another 30-plus-year veteran MAI – a Senior Appraiser/Director with our firm – who helps me with our internal appraisal reviews necessary to assure compliance with regulatory and professional standards, and internal quality control. With his help, every appraisal report is reviewed by an MAI-designated member of the Appraisal Institute before going to our clients.
- Report Production & Delivery – These days we have several support staff that help with creating PDFs and hard copies of the reports and making sure these are delivered to our clients in a timely manner. I have not punched, bound, or delivered a report to a client in years!
- Banking, Accounting & Bookkeeping – Now, instead of me going to the bank with client checks, my Director of Finance & Administration performs that function. She also creates all of our invoices in QuickBooks Online and works closely with our outsourced Bookkeeper and Tax Accountant to make sure all accounting entries are made properly in the accounting software and reconciled monthly. They also have assumed responsibility for our weekly bill paying function (accounts payable) and preparing monthly financial reports for our monthly financial meeting.
- Information Technology – We have outsourced our various IT needs to an IT Managed Services company who handles all of our computer hardware & software needs, our network, server, email, and cloud services. Instead of me or my assistant or some “IT Guy” trying to figure out what’s wrong with one of our computers or computer systems, we simply call or email our IT Help Desk and soon, the problem is fixed!
- Human Resources – You can never outsource all of your HR functions, but you can come close! A few years ago, we decided to team up with and employ a Professional Employer Organization (PEO) company to help us with many of our HR needs: payroll, withholdings, recruiting, background checks, onboarding, benefits administration, 401(k) plan administration, performance reviews, and exit interviews, to name a few.
Today, I no longer work 12 to 14 hours a day, six or seven days a week. I no longer wear all of the hats and do all of the work of the business. I have transformed my internal mindset and paradigm from that of a technician to that of a strategic business owner and CEO. I now spend the bulk of my time working on my business, focusing on creating and communicating our company’s vision and values, and leading our strategic planning process and related meeting rhythm.
I’m no longer stressed out, burned out, and cranky to be around. I feel liberated and more at ease than I have ever been in my business-owner life. Yes, a few things still rattle me from time to time, but by and large the difference between then and now is nothing short of miraculous. And I owe most of it to these two books that I have read and continue to re-read for continued wisdom and inspiration.
Thank you Michael Gerber and Daniel Murphy for helping me change my mindset from that of a Technician working in my business to that of a Strategic Business Owner/CEO working on my business. It has made all the difference!