I have had the good fortune to work with a few really good business leaders and owners; and more than a few not so good business leaders and owners. And while there are a number of traits that the good leaders possess and use, there are two that I believe are critical:
- Insane long-term focus on the business strategy
- Extraordinary devotion and relationships with all employees
It’s easy to believe that you are intensely focused on your business strategy and your business, it’s quite another to practice that focus. I’ve seen real estate management business owners believe they can successfully provide legal and accounting services. Another owner believed success in fast food would translate into success with a full service restaurant. Other owners are believers in the idea of the week. None of these owners succeeded.
Successful business owners aren’t reluctant to explore ideas to expand their business. But they do spend time analyzing business expansion. And it is always in the service of supporting the existing long-term strategy. For example, I have a manufacturing client that expanded into fabricating its own tools rather than outsourcing them. It was a process to vertically leverage the business. The expansion has added a significant amount of EBITDA (earnings before interest, taxes, depreciation and amortization) to the business which has added significant value to the business.
Not only do successful owners carefully assess opportunities, but they focus over the long term. Staying out of the muck of the day to day minutia is paramount. I have worked with CEO’s to identify and delegate activities that are not relevant to the important activity of enacting the CEO’s vision for the long term.
Employee relationships are all about culture. Successful business owners know their employees. Not just their names, not just their jobs; but their interests, and names of family members. Successful business owners spend time walking the plant floor getting to know their employees; the Tom Peter’s concept of MBWA “Management by Walking Around”.
I think tours of company facilities with company owners are especially revealing. Do employees welcome interactions with the owners? Or do they avoid eye contact and look for ways to scurry out of the owner’s line of traffic?
This concept is also a focus of potential acquirers or investors. Several investors have mentioned to me the importance of the facilities tour; to quickly assess the culture of inclusiveness. In this day and age of finding good employee resources, investors are keen to find businesses where the leadership is actively engaged with employees.
Furthermore, I’ve seen effective leaders build relationships so no one is afraid to deliver bad or good news to the owner. Think about the importance of a line worker being able to address the owner of a company about an issue that could either cost the owner money, or improve margins and profits.
What Do You Do?
So as a business owner, how do you fare? In your heart of hearts, where are you in your ability to focus? How are your employee relationships?
And what do you do if you aren’t where you would like to be?
Take the time and effort to solicit honest and direct feedback. From your Board, your Advisory Board, your CEO peer group, and your trusted business advisors. I know in my practice as a trusted advisor; this feedback has proven to be of the most value to my clients.