Owners, Manage Thyself.
By Andrew J. Birol, President, Birol Growth Consulting
You run a good business. Yet, just after you have a great month, the next one turns sour. Even worse, it takes another two months to get back on track.
Why does this happen? Causes vary; perhaps a key employee quits, or production messes up, or the competition stole your favorite client. Or perhaps you havent quite adjusted to your role at the helm of a company you know so well. If you spend most of your time managing through crisis after crisis, you may start to feel like Bill Murray in the movie “Groundhog Day.”
In the immortal words of Rosanne Rosannadanna, “It’s always something.”
Whether you have been running your business for awhile or are just being handed the reins, as the leader you are your business. Let’s face some cold hard truth: if "its always something," it is you. Some part of your leadership, vision, management style, or ability to implement tactics is holding your company back.
So, what can you do to manage yourself to greater success? Here are three keys:
- Recognize that you now play three roles:
- As the owner, you protect the firm’s reputation, wealth, and purpose.
- In your leadership or presidential role, you set direction, achieve results, and manage everyone and everything.
- As employee #1, you are the icon for providing the company’s key product or service. To your clients, you are what they are buying. You must sell yourself, deliver yourself, and get paid for who you are. This can be difficult if you have inherited this role from a long-time company leader or founder, but it is essential that you do it.
- Compensate yourself in four ways:
- As an owner, reward yourself for building wealth. Pay yourself an owner’s salary or distribution, increase your insurance and investment planning, and gradually extract equity from the business, tying your reward directly to how much wealth your business has gained. Obviously, company cars and other perks can be a tax effective approach. Your accountants and financial advisors will help you here.
- As the president or leader, your goal is to increase sales and profitability. Hold yourself accountable for results by considering yourself an employee in terms of compensation. Shop your marketplace and pay yourself according to what a non-owner president would receive. Clearly you would earn a base salary, significant incentive compensation, and some deferred income. But remember, a leader who hits goals is well paid; one who doesn’t is fired.
- As the product or service provider, your key success measurements are customer satisfaction, market penetration, new product introduction, and up-selling/cross-selling. Compensating yourself here is tricky. What would you pay a key employee who invented a process, was adored by customers, or was invaluable in delivering your service? Ask outsiders to help you determine both your success and what it is worth.
- When you have determined what you should be paid for each role, add them up to arrive at your total compensation. If you succeeded in all three roles, pay yourself well; however, if you were not effective in one or more of your jobs, cut your compensation accordingly. By linking your pay to each of your roles, you can stay accountable to a "boss" — yourself.
- Distill all your day-to-day efforts into selling, delivering, and developing your business:
- Selling is the activity that starts and keeps your company rolling, so your most important short-term activity is to learn to sell what your company makes. By uncovering customer pain and prospect opportunity, you drive your business forward. You are doing this effectively when you propose to three of every ten prospects you meet and close one of those three. Become excellent at identifying which of your qualified prospects to propose to and which ones are likely to close.
- Deliver only what you like to make and have succeeded in producing to others satisfaction. To do this, determine your Best and Highest Use and assure it meets your client’s needs. Hone it, codify it, and make it distinctive. The more special your product, the more you can raise your company’s description and your client’s perception of its uniqueness, while lowering your cost of delivery.
- Develop your company’s long-term ability to perform at higher levels. Understand what it takes to develop prospects and build the top half of your sales funnel. Meanwhile, brand what you sell while continuing to distill and expand your and your company’s Best and Highest Use. As you do this, narrow your target market and pursue greater opportunities to resolve customer pain and lead them to greater opportunities.
Its critical that you focus on selling, delivering, and developing your company all at the same time. Why are all three important, and why wont any two work?
- Sell and deliver? Your business will always live hand to mouth.
- Sell and develop? Your poor value will drive your customers away.
- Develop and deliver? You will go out of business because no customers will ever get sold.
Think of it this way: selling solves your short-term revenue needs, delivering ensures that you exchange value for money, and development means you build your growing brand. If you make equal and balanced progress in each area, you will help your business survive, thrive, and grow. In doing so, your daily activities will stay on track, and you will have the confidence to perform your roles beautifully and earn your compensation.
Articles by Birol Growth Consulting are © copyrighted and all rights are reserved. However, articles may be reprinted with prior written consent if attribution is included as follows:
© Copyrighted by Andrew J. Birol, President of Birol Growth Consulting, who helps owners grow their businesses by growing their Best and Highest Use ®. Andy can be reached at (412)-973-2080, by email at firstname.lastname@example.org, or on the web at www.andybirol.com.