CEO’s of growing firms often find themselves in need of someone to turn to for advice on how to deal with a myriad of issues as their businesses grow.
No one knows everything and for many entrepreneurial CEO’s this is especially true when it comes to accounting, finance, marketing and even management in some cases. While typically masters of their technology in this era of expanding technological growth, CEO’s of technology based businesses do not have the same level of expertise in some of the fundamentals required to insure profitability.
Many of their concerns have to do with managing growth effectively. There is a natural evolution of all businesses, products and technology’s that closely resembles our own as we grow, mature, age and eventually die. As I have said often in many of the executive briefings and seminars that I have done over the years: “we all start out small wrinkled up little people and we all wind up small wrinkled up little people, 70, 80 or maybe 90 years later these days”.
Many business experts have broken down the natural evolution of all businesses into four phases – embryonic(e), growing(g), mature(m) and aging(G), and have developed specific characteristics for each phase, Again, very similar to our own life experiences. Just knowing what to expect as you move from one phase to the next is helpful and educational.
Having worked with hundreds of entrepreneurs and founders of growing firms I have my own description of what I have seen as predictable milestones in the evolution of their business where having the right person to talk to talk to could have avoided some very painful and expensive mistakes.
The first and most obvious of these natural pitfalls is the need to have a plan. As I discussed in an earlier article (Why Plan?) planning is critical to the success of anything. However, many entrepreneurs start their businesses without enough cash and experience a number of predictable problems that could have been avoided if only they had taken the time to develop a plan.
Developing a business plan is a relatively inexpensive exercise done on paper that can help any CEO avoid very expensive and often predictable mistakes that happen without one.
I’ve also met CEO’s whose firms have become large enterprises and who were struggling to manage an unwieldy collection of products, employees and increasingly unhappy customers, and they still did not have a plan! Who knows what kinds of lost profits and opportunities they missed?
Obviously, the first person you need to find for your advice squad is a planner. Someone who can help you understand the value of developing a well done business plan. Many have said that the real value of building a business plan is not the creation of the plan document itself, but the process that clarifies and values all the resources required, and lays out an achievable timetable to get the business to where you want to be profitably.
The statistics clearly indicate that many more start-up’s and even growing firms fail than succeed because of the lack of a plan, management experience and sufficient capital. Venture capitalists and even early stage investor’s require a business plan before they will even talk to the typical entrepreneur. Bankers are even stricter guardians of their cash and have greater information and reporting requirements than may even be in your plan.
The simple rule of thumb is that any entrepreneurial CEO of a growing firm needs to form an advisory board or “advice squad” early in the evolution of their business made up of executives with experience in areas of business management where they are lacking. The advisory board members skills should complement their own.
Accountants, bankers, lawyers and planners usually make for excellent advice squad members. These are experts that you have to deal with in the evolution of your business anyway so why not have them function in more of an advisory capacity than just for a fee when needed. If these experts that you deal with professionally cannot become involved because of an ethical issue or conflict of interest, ask them to recommend a trusted colleague.
Obviously, there is no sense forming an advisory board without a plan for how you are going to use their individual and collective expertise. Likewise, you need to have some form on an incentive, or stipend per meeting, or annual fee for their participation with you and for their advice in growing the business. Then you need to meet regularly with them individually on specific day-to-day issues and collectively on a quarterly basis to review actual results against plan, as well as progress in terms of the strategic milestones in the business plan.
Having an unbiased expert to meet with periodically who is not wrapped up in the day-to-day aspects of your business is invaluable. Their objective evaluation of a situation can save you from making an embarrassing and expensive mistake. Even just offering up other options that you didn’t think of can be very helpful.
At quarterly meetings just having an advisory board member ask “why do you want to do that” often sets in motion some additional analysis that can be extremely rewarding. These meetings have an uncanny way of injecting sound business sense into decisions that have evolved often without the right level of common sense.
Seriously, think about it and if you don’t already have an advice squad get started setting up an advisory board of experienced professionals with skills you are missing, or just for their objectivity.
Don’t outsmart yourself by having no one to talk to but yourself.
My next column will be on the difference between marketing and selling for CEO’s of growing firms like you.
E mail me with questions or comments so that we might begin a dialogue to help you get your business to where you want it to be. I can be reached at email@example.com
An entrepreneur himself, Bob has spent most of his career involved with starting, growing and selling businesses. Having held managerial positions with IBM, Pfizer and Exxon, he draws upon extensive organizational experience with large and small companies in advising CEOs of growing firms. He is available online to answer questions from Chief Executive readers, as well as offer workshops, tips, books to read and a monthly online column about common issues facing CEOs of growing firms. Bob has been featured in USA TODAY for his work with Inc 500 firms and is associated with NYU’s Stern Graduate School of business in their Center for Entrepreneurial Studies where he is a Venture Mentor, Marketing Strategist and Business Plan Reviewer.
He is the author of GUIDEBOOK TO PLANNING – A Common Sense Approach to Building Business Plans for Growing Firms, which has recently been reprinted. He is a past contributor to Chief Executive and one of his articles was featured in The Best of Chief Executive.
E Mail Bob at: firstname.lastname@example.org