Foresight CFO

Escape the Owner’s Trap

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by

Kirk W. McLaren
in
  • Do you feel compelled to work on the weekends?
  • Have you ever wanted to talk with an expert but couldn’t make time?
  • When you go on vacation, is it more like remote working?

If that voice in your head said, “that’s me,” to any one of these, you are in the Owners Trap. The Owner’s Trap is when the business depends on the owner. CEO business owners are frequently responsible for sales, delivery, customers, and/or employees. The day-to-day work feels like a whirlwind that never stops. 

Even when not working, the world’s weight bears down on the CEO. Michael Gerber describes owners wearing many hats in his book the e-Myth. Wearing many hats is expected because we are the only ones when we start our businesses. Some CEOs don’t trust others to do as good a job as them, so they hold on to key responsibilities. 

It is easy to perpetuate being trapped for decades even if your topline grows substantially.

The impact to you is no time for people and other things you care about.  Less money because you are the sales and operational bottleneck. And a lower valuation because you are the business. When it’s time to pass the torch, the CEO owner will be stuck in a 2.5-year earn-out on average that will not end well.

John Warrillow’s research in Built to Sell concludes that businesses without critical dependencies are 71% more valuable than their competitor. 

THE SOLUTION IS:

  1. Establish Destination Clarity

    Start with the end in mind. Develop a matrix or pie chart that shows how you use your time across a week; highlight the things that you were born to do in yellow and the things that you must do, like leadership, in green.

    Now create the Future Organization Chart at your target revenue size that includes delegating everything not highlighted in the first exercise. You may already know these approaches, BUT do you do it, do you really do it?

  2. Build Your Financial Flight Plan

    This is when you figure out “how” to reach the destination. Include your managers and employees in this exercise openly.  Ask them how they would solve this if they were you.  

    Where it makes sense, promote and develop current employees. Establish “The Company Way” of written best practices, training, and performance management. Include considerations about workforce flexibility, working virtually, and other factors that provide a competitive advantage. 

    Align compensation and benefits at each stage of the flight to achieve destination outcomes.  Then build the integrated financial model to ensure affordability.  Run “what-if” scenarios to figure out the best path, this includes the timing of key hires and the sales needed to support each step.  Warning to the CEOs who decide to fly without the numbers.

  3. Follow Through Implementation

    Teach and equip employees to drive results. No shame if you are frustrated because your employees do not follow through. That’s going to change. With your leadership, the skills and tools are readily available.

    As you establish The Company Way, make these a cornerstone.

    1. Project Management – the skill here is selecting the priority, identifying activity across a timeline, and managing a budget; Basecamp is an easy task-level tool.

    2. Daily Dashboard – provide a daily dashboard to every employee; ensure that it shows the variance to the flight plan; teach them to take action proactively to stay on course; check your existing platforms for this capability; if needed, start with spreadsheets to figure out what you need

    3. The Habits of Profitability – teach employees Habit 2 to use the monthly financials like a scoreboard, Habit 3 to develop the eight performance drivers, and Habit 4 to use the budget to engineer profitability going forward.  I describe these in Chapter 6 of my book – The Growth CFO Void.

Now take the vacation completely unplug – even if the first step is just for one day. Your employees will appreciate the confidence that you are putting into them.  When it’s time for your employees to solve problems, do not rescue them. Instead, ask what you would do if you were in my shoes.

You are on the right path to Escape the Owner’s Trap with these actions.

How Foresight CFO Is Different from Other Outsourced CFO Services?

At Foresight CFO, our Growth CFOs do Destination work with CEO business owners globally. We deploy Growth CFOs in 3-person teams to go well beyond what anyone CFO could ever do, Schedule a 25-minute Discovery Consultation with me