As businesses grow, owners delegate various finance and administrative responsibilities to managers, but it’s crucial to simultaneously grant them the necessary authority to achieve desired outcomes and maintain accountability.

Primary Implication

One of the primary differences between owners of corporations and small business owners is their tolerance for financial mismanagement.

Those investing in a business as a shareholder will never accept chaotic management of company assets, particularly cash flow.  Whereas small business owners never adopt proven financial practices because they fail to recognize the importance of financial controls foundational to making more money.

Overview

As a business grows, the owner will do less of the sales, ops, and finance because they have functional managers in place.  When finance and admin managers are brought in to help the owner control their business, this leads the owner to let go of the following accountabilities for finance and administration:

1. Customer Relations + Service
2. Work Orders + Job Scheduling
3. Cash Flow Management
4. A/R, A/P, G/L Management
5. Sales + Operation Reports
6. Financial Strategies, Analysis, + Reporting
7. Invoicing, Credit, + Collections
8. Payroll
9. Bank Reconciliation
10. Human Resources
11. Computer Services
12. Licenses and Registration

As you delegate each of the above responsibilities, ask yourself:  “Am I going to delegate the accountability for the result as well, or am I going to hold onto that?” Actions with only responsibility but no authority means that all you can do is hold your responsible manager for doing the action or not.  You can’t hold them accountable for the results of a responsibility if you don’t give them the authority to shape the actions required to produce the planned result.