Is Your Profit A Grind?

It wasn’t until I sold my business and had time to reflect that I saw that I was flawed as a leader.

It was true that I had become better at prioritising high value activities: investing in key relationships, developing and holding my team to account, driving higher levels of discipline across the business and balance current demands (read firefighting!) with longer term investments.

However I was blinkered by the momentum of the existing business model, consumed by the pressures of leading and without a doubt, missed opportunities that would have created new revenue lines, new ventures and new relationships that were better than the ones that paid the bills.

In my last article I wrote about founders and owner-managers being stuck against the same four things: Time, Execution, Mindset and Structure. A leadership programme in 2018 helped me to be better at the first three but this programme was never going to tell me I was polishing a turd. They were going to give me the tools, stand back and see if I figured it out myself.

I didn’t, until I had time to reflect.

I believed, the way most owner-managers believe, that once time, execution and mindset constraints were sorted, capital would find me. It didn't. I'd assumed the leadership piece was the hard part, and that everything after it, investment, growth, a business that could stand on its own, would more or less follow once I'd proved I could lead. Understanding why that assumption was wrong took years longer than the four months the programme took.

What I hadn't touched was Structure, and Structure turned out not to be a leadership problem at all.

Execution is the craft of running well what you've already got: discipline, delegation, people development. I broadly got good at this.

Structure is a different capability entirely. Structure is whether your business is structurally profitable in the world it operates in. Do you solve a real problem for your customers? How do they value your solution to their problem? Is your solution protectably different? What defensibility mechanism do you control to give you consistent protectable profits? Does the structure of your business: your people, your assets, your IP, actually leverage these defensibility mechanisms? If not, how do you build the model that can?

Without having this Structure crystal clear to you and your team, you may make profits but they will be unreliable and a grind to produce. Without knowing the path to this Structure that works for you, you will be paralysed by the current model you have.

The analogy I share with leaders today is one of a paper corridor. You think the only path to walk is down the corridor in front of you, the one you can see. But the reality is that if you step hard enough, left or right, there's an alternative path. Give yourself the opportunity to believe there's a different structure to the business you are currently consumed by, and new possibilities emerge.

Ask any investor what they want and you'll get some version of the same answer: a dynamic leader, a differentiated business, structural profitability, room to scale. Fair enough. Nobody backs a business that can't do those things. The problem is that a business capable of ticking every one of those boxes has already solved the problem most owner-managed businesses are actually stuck on. Capital shows up once structure exists. It doesn't show up to build it. You need the thing capital would fund in order to qualify for the capital that would fund it. Chickens and eggs.

I see the same mistake now, dressed differently, in how businesses are approaching the automation era. Leaders assume that buying the technology is itself the transformation, in the same way an underfunded owner-manager assumes the loan or the investment is what fixes the business. Neither is true. The technology, like the capital, is an accelerant applied to a structure that already exists. Applied to a business with no differentiation and no defensible position, it accelerates nothing except your outdated, undifferentiated model. It might give you more revenue, but it won’t give you more profit.

So the foundational work is critical and must come before the fuel, but doing this work whilst running a structurally unprofitable business is difficult bordering on paralysing, which is exactly why so few owner-managers ever get there alone.

I mostly got my Time, Execution and Mindset constraints out of the way in 2018 and thought that was the hard part. It wasn't. It was the part that was solvable alone, with enough discomfort and enough delegation. Structure took years longer, and needed something I didn't have inside my own business: someone who already knew what a structurally investable business looked like, close enough to the decisions to help build one, before any bank or investor was willing to fund the process.

That's the gap Gritt exists to close: working alongside a leader who has already sorted time, execution and mindset, but is still doing the foundational work on structure without the accelerant, and doing it with them before anyone's asking for a return on it.

Next time, the steps to building that structure. Get it right, and the wheel stops needing you underneath it to keep turning.