The answer to the question ‘What are the three keys to success in business?’ is ‘people, people, people’. Just as location is everything within the world of property, so people are everything within a business.

And as much as this is a key area to get right, it is also the area in which many make most mistakes. Good leaders should have no problem whatsoever with delegating, and if you delegate to the right kind of people, i.e. the kind of people who relish responsibility and take initiative, then everyone wins.

However, if you over-delegate to the wrong people, then that is when everything can go pear-shaped, and this was my experience at a key point of my company’s history.

Growing beyond a family

I always seem to have been someone who others have looked to follow, and this is a common experience for entrepreneurs. It works well when we know what we are doing!

In sport, despite not being the best player in the sports teams, I often ended up as the captain of the football team or the stroke of the rowing eight. Some people are happier leading and others are happier following.

Having a very strong leader is a positive in the early days of a business. The leader can do every job and task within the business, probably better than those doing it. She or he also knows everyone within the company personally and can inspire them individually to action and doing a better job.

This dynamic changes significantly as companies grow through the ‘family stage’. The second stage is where the company starts to form into different teams or departments. Each team has a manager, and at this point the overall leader inevitably cannot know the detail of everything going on within the company.

It goes without saying that you need the right managers for each team, which should be a relatively easy task, but it is amazing how many people screw this up. Wrong appointments can be made for all sorts of reasons, particularly in family businesses.

At this relatively early stage, if you have managers who treat the business as if it were their own, are of good character, have the right knowledge and have the respect of their team, everything should work.

On many occasions customers have assumed that one of my managers was my wife or life partner because they thought that they cared too much for the truth to be otherwise. This is the best compliment anyone can pay, in my opinion.

Having managers being happy to make decisions on their own without deferring is key. I remember in the early days of the business sitting at the Oval with a customer watching England play the Aussies when my phone rang.

It was a manager ringing me from the office to tell me that she had just fired a member of staff for gross misconduct. Initially, I was slightly surprised she had done this without consulting me, but then pleased that she had cracked on and done what she needed to do.

Completing the transition from an extended family-sized business with around 10 employees to a more organised team-based group of around 30–40 people went reasonably well. Growth was steady and consistent, staff were loyal and committed and systems were in place for people to follow.

Many of the team knew each other via family or the community and this had the benefit of them helping each other out across different areas of the business. Around this time in 2013–14, we were enjoying rapid growth of over 30 per cent in one year.

Despite some very positive sales and profit figures, on the inside all was not well. I was becoming increasingly frustrated in management meetings, which had become a task-based check-list type of meeting rather than a strategic group driving the business forward.

Help from outside

The crunch came, one day, when I was sitting in one of our bi-weekly management team meetings and looked around the room at the five other people there.

Two thoughts came to mind: (1) I knew I could do all their jobs better than they were currently doing them and (2) except for one, the company was the largest company they had ever worked for, and just for the record, we were then only in single-digit £m.

I realised I needed help. Up until this time, I had been self-sufficient, but at this point in our growth, I needed help from outside. The business had become a monster that was out of control.

No one else would necessarily have felt that from within the business, and all external indicators looked good, but this came from a gut feeling, which I will talk more about later.

Help came in the form of a non-executive director. Someone I knew from the world of food, in which I lived and worked, but who had recently sold his own business and had some time on his hands.

I asked Jeremy to come on board, initially just as a personal mentor to me, as I was aware some business-changing decisions had to be made, and I needed some personal support and direction on how and when to make them.

With his encouragement, I disbanded the management team and stopped regular management meetings. This may sound an over-harsh way of dealing with a problem, but we had gone from being a business that was continually looking outwards to do business better to one that was only firefighting its own problems.

I had over-delegated to the wrong people for the size of business we now were, and that team were not able to take us forward. More importantly, we had lost much of the purpose-driven side of the business for several years.

It was a very low point in my business history. All but one of the team, who is still with us, were more interested in their own gains than the world’s, and I discovered later that two of that management team had been stealing from the company.

Most of that group would leave the business over the following six months anyway, and the action of taking away their authority within the business precipitated that.

This time in the business demonstrated both my own lack of judgement of character and also my over-delegation to those who weren’t able to carry the company. Overall, they were very decent people, but they had reached the limit of their capabilities.

They had all played an important part in growing the business to around half the size we are now, but they were the wrong people to take us beyond that. Now, several years later, when I look around the room during our management meetings, every manager in the business is doing a job ten times better than I would in their role.

This is an extract from new book Forces for Good: Creating a better world through purpose-driven businesses, written by Paul Hargreaves he is also the CEO of the fine foods wholesaler Cotswold Fayre.