CEOs and presidents of privately held companies face unique challenges. They are accountable for providing the vision, guidance, decision-making, and leadership that drives the success of their businesses. Unlike their counterparts at publicly held companies, they are also intimately involved in the day-to-day activities that are necessary for their survival. These dual roles can distract them from their most important responsibility, being the strategic leader, thinker, and visionary. It is, for example, difficult to juggle the needs of employees, the demands of suppliers, relentlessly pursue the delivery of extraordinary customer service, maintain profitability, and surpass the competition while simultaneously monitoring the local, state, and global economy and reacting to industry trends.
There are certain critical items that must become second nature to maintain focus as the head of your company.
Concentrate on your greatest asset, your people. Select the highest quality partners, employees and staff available to help implement the company’s mission. A committed management team working together to achieve the company’s financial and philosophical goals is a key to success.
Success can only be achieved by communicating effectively. True, we all have more technology than ever before, still, many of us communicate very poorly. E-mail and voice mail are replacing personal contact. CEOs of middle market companies that grew quickly during the past 10 years often face the additional obstacles of multiple locations and conflicting, often warring, cultures that resulted from mergers or acquisitions. Unfortunately, even those that grew organically do not seem to be able to communicate effectively either internally or externally. Customers comment "we did not know you do that" or partners or employees are too quick to point out that, "No one told me." In addition, important customer information is woefully absent in our databases. Knowledge management is a great concept we embrace but do not pursue. As CEOs, one of your greatest powers is in your ability to communicate and persuade. I recommend you spend time talking to everyone, hearing their ideas and concerns, enforcing an open door policy. Frequent, personal encounters and staff meetings provide valuable forums to communicate the company’s accomplishments and short comings. Encouraging staff participation is essential to reaching your goals.
It is equally as critical for you to communicate effectively with your customers or clients. Asking the right questions can help you identify (1) additional services or products your clients’ need, (2) their level of satisfaction, (3) new markets or industries not being served, (4) services and products not being offered, (5) how your clients make decisions, who makes the key decisions, and (6) where they turn for advice.
I suggest creating a business plan. While this sounds simple enough, I have found that too many leaders of closely-held, private companies have not made time to plan appropriately. Daily interruptions take priority and company leaders find themselves running their business with a reactionary rather than proactive approach. They spend more time "putting out fires" than planning for them. Having a plan in place will provide your company a road map to achieve its vision.
In addition, a plan creates accountability. Planning leads to identifying short term objectives and long term goals. Most importantly a plan should include the performance metrics that enable the company to establish if it is accomplishing its goals. An effective plan identifies all company processes (from how an order gets processed to employee reviews, etc.), prioritizes and documents them, and finally standardizes the processes so that everyone in the organization understands and adopts these procedures. Lastly, an action plan is put into place to ensure each process becomes "world class," positioning the company for continual improvement. Continual monitoring, training, and adjustments to the processes make change easier to implement.
The strategic plan should be a short document, an outline perhaps, that provides guidance and flexibility. Every plan should include these components:
- An agreed upon statement of the company’s mission and vision;
- Concise short term objectives and long-term goals to achieve the vision;
- A detailed, integrated marketing plan;
- Financial planning to support the business’ goals, using all appropriate tools and resources (budgets, forecasts and cash flows);
- Continuous tax planning to take advantage of every opportunity and create new opportunities;
- Ongoing market research to help you regularly evaluate your position, your competitors’ position, and your industry;
- A program for continuing education at all levels;
- A plan to build a strong executive team; and, finally,
- A succession plan.
These tools allow the leader and management team to regularly assess the business’ progress and make the necessary adjustments to stay on target, even if the target is moving. As CEOs and presidents, we need to assume a broader perspective.
True, we must remain aware of details such as the impact of state tax laws and industry regulations, changing interest rates, changing leadership responsibilities such as promulgated under the recently passed act, Sarbanes-Oxley, new uses for technology, shifting customer expectations and needs, and which processes and inventory systems will result in the best profit margins. Most importantly we need to make the leadership decisions that ensure the continued legacies of our companies.