I read a post recently that said a CEO has only three indelible roles:
- Choose the direction of the business,
- Get the right people on board, and
- Keep the cash flowing.
I struggle to find anything wrong with this simplification. Let me break it down.
Lack of Finite Direction
Assume for a moment that this CEO has cash management and hiring good people under control, but she struggles to pick one direction for the organization. What happens?
Not being able to define who her customer is leads to poor decisions on products, services, and pricing. Marketing flounders. Sales start swinging wildly to win mismatched business.
The team goes after projects the company may not be qualified for. Those projects consume the resources of the business, overwork the employees, and strap cash flow.
The other two CEO roles just became more difficult to manage.
Compromising on Personnel
What if she had cash management and strategic focus, but failed to hire and retain the right people?
Without competent people to delegate to, the responsibility of keeping things running would fall back on her. Every bump and every opportunity lands in her lap.
She might keep things together for a while, but eventually, she will grow weary and make mistakes. The direction of the business and cash flow would be compromised.
Run Low on Cash
In the final scenario, the CEO surrounds herself with good people and pays close attention to the Mission, Vision, and Strategy of the business.
If business is good, cash will take care of itself, right?
Except that cash flow is also a key performance indicator. When companies let profits slip, fail to follow processes, or let costs creep up – cash flow will suffer. This is an argument for focusing on direction and personnel.
If our intrepid CEO takes her eye off of cash flow – for instance, she takes on a job that is too big for the firm – then vendors get paid late, hiring slows, and carpets don’t get cleaned.
The firm has to take low-performing projects to shore up cash flow.
If it sounds like our CEO is keeping a lot of balls in the air, she is. But in a small company it’s worse than that.
Small business owners typically act as a key employee in sales, operations, or finance capacity. Plus they have multiple managers – many who might be under-qualified – reporting to them as well.
It’s not like juggling three balls. It’s more like ten or twenty.
Which is why the three main roles are so important. Put energy into them every day and the other demands will have less power over you.
You know the phrase, “Get back to the fundamentals”?
In one day, you can:
- Clarify the direction of the company. One sentence. That’s all it takes. “Our primary business focus is [insert goal here].”
- Make a positive decision on personnel. It may mean letting someone go that isn’t part of your long-term solution, but that’s a start.
- Make a difficult choice about how to prioritize your cash. Maybe you need to inject cash back into your business or personally get on the phone to every creditor, but start now.
Work on the fundamentals. Teach those around you how they can help. Start now.