Hopefully you’re reading this article on a dock in Muskoka, feet up, beverage in hand while taking in views of a pristine lake. Maybe you’re enjoying the fruits of your entrepreneurial labour and taking some summertime downtime.
But if you’re like so many business owners who have grown their companies past the medium-sized threshold—usually defined as more than 100 employees and $50 million in annual revenue—there’s a very good chance you’re still at the office, managing operations. The reason: you’re still working in the business rather than on it.
Now, that term is bandied about so much in the business world that it’s become entirely clichéd. Every CEO puts in an extraordinary number of hours, and that doesn’t usually change as the business grows. Case in point: many Fortune 500 executives regularly log 18-hour days. Sometimes that’s because they’re A-type workaholics. Most of the time it’s because that’s the expectation. If you want to constantly take an organization to new heights, and you happen to be the boss, you have to put in the work. Period.
Here’s the difference: most of those leaders are working on big-picture, strategic tasks. They spend their days analyzing their industry, networking, building relationships, securing new financing sources to fuel growth (when necessary), looking for merger or acquisition targets, marketing their business by communicating with local or national media or finding new ways to boost sales. I could go on. What they typically don’t have to do, except in unusual circumstances, are the more laborious activities that should be delegated to junior members of their executive team.
How do they manage to extract themselves from the day-to-day running of the business? By changing as leaders, understanding when to step back and employing several indispensable managerial tactics that are ultimately responsible for the continued growth and success of their organizations.
They learn to let go
When your business is your baby, it’s hard to put control in someone else’s hands. But whether it’s a question of eventual succession or simple growth management, every successful CEO must at some point hand over the reins to managers who can help shoulder some of the load. For a medium-sized company, one leader simply can’t do it all.
Getting to the point where you’re willing to let go—at least somewhat—is challenging. You’ve built, managed and grown your business, shedding proverbial blood, sweat and tears along the way. Maybe literally when it comes to the latter two. But understand this: continued expansion is impossible if your leadership group doesn’t grow along with the business. In fact, you’ll put the business at greater risk by not learning to trust and rely on others.
They focus on relevant financial metrics
“I would love to delegate much of my work, but I can’t afford to hire senior-level executives.” It’s a common complaint that can also create an operational quagmire for budget-minded CEOs.
Yes, you do need ample budget to pay the six-figure salaries that top leadership talent commands. But a better understanding of your financial situation may help to alleviate concerns that hiring top talent will cripple your company’s bottom line. Bringing on a new salesperson, a top software developer, a CFO or a COO, for example, will likely be expensive. But if you recruit the right people, those are investments in your organization’s continued growth. Rest assured, they’ll eventually pay themselves off—and then some.
The most important consideration here is cash flow. Because these kinds of hires are inevitably a long-term investment, you’ll need to find a way to finance their hefty salaries until those investments begin bearing fruit. That could take months or even years if an organizational turnaround, or perhaps the implementation of new systems and processes, is on order. In other words, you may need to tap retained earnings or acquire financing via venture capital investment, new partnerships, bank loans or lines of credit (to name only a handful of potential options) to balance your books in the meantime. Optimizing internal employee productivity and efficiencies—by improving inventory management and production or service processes, or cutting accounts receivables time, for example—are other tactics that can help free cash and free your time to focus on higher-level tasks.
Also, remember that a growing cohort of nearly-retired executives are available and willing to work part-time, or on a contract basis. This relieves long-term balance sheet risk, provides expertise with flexibility, and even allows you to cycle in new leaders on a shorter-term basis if doing so makes strategic sense for the business.
They build a trusted leadership group
The lynchpin here is finding managers who you can trust to run the operations side of the business, while you work to propel its growth. Although some CEOs have luck using executive recruiters to fill these positions, many have greater success nurturing talent and promoting internally—which can also be a long-term process, so start now if you believe some of your staff have leadership aspirations and mettle—or tapping management talent through their own networks.
What makes a great leadership hire? They need to have the specific skills required to grow a business such as yours, but they may not even come from within your industry. We’ve seen many clients hire C-suite executives from different sectors who bring a fresh perspective and new strategies that deliver similar results. But that’s usually because they display common characteristics: adaptability, a passion for growth and an embrace of the organization’s culture, shared values (although differences in opinion can, and probably should, occur from time to time) and an understanding of your business and industry.
Leaders who share these characteristics typically boast a much higher success rate than others who are parachuted in to fill a role based on an impressive resume, but never really give their all to the organization.
They never take their foot off the growth pedal
So, you’ve learned to delegate, and you have the free cash flow to hire and manage a leadership team that makes you comfortable enough to shift your attention to other parts of the business. Time to relax, right? Not so fast.
Your job as the CEO is to continue finding new ways to drive sales and fuel the growth of the business. That could mean looking for acquisition targets, developing new product or service lines or building out that executive team. But remember that if growth doesn’t continue, if revenue stagnates or even slips, you’ll be facing unpleasant discussions with your CFO or Chartered Professional Accountant, who will begin recommending cutbacks. The team you’ve worked so hard to build might need to be contracted due to rapidly-emerging budget constraints.
The bottom line is this: growth can only be sustained if it’s affordable. Keeping your foot on the accelerator will help generate additional revenue that will drive expansion and help you achieve your strategic business goals.
Pulling yourself (mostly) out of the business could well prove to be the most business-friendly decision you’ve made this year.
Marshall Egelnick, Managing Partner