Small Business Series - Think Like a CEO (Ep 5)

Series Finale And Quick Recap

Hi, this is Stephen McLain of the Finance Leader Podcast. This is bonus episode number 102. Now, welcome to the last installment of my limited small business series. I do hope that business owners who listen to the series were able to walk away with a few ideas to help them in their business and what they are facing. Now, if you missed the previous four episodes, I talked about revenues and profit in episode one. For episode two, it was about the importance of cash flow. Pricing was the topic for episode three, and last week I covered the five numbers that every business owner should

Owner Versus CEO Mindset

know. For the episode this week, I am talking about thinking like a CEO, not just a business owner. Did you start your business to create something or did you start it to create another job for yourself? Many entrepreneurs begin because they're excellent at something, and that might be consulting, construction, at design, maybe technology and food service, healthcare, professional services or another specialty. But eventually being good at the work isn't enough. You have to lead the business. At some point, you have to move from working in the business to intentionally leading the business. Again, we've talked about revenue and profit and cash flow and pricing and the five numbers every business owner should know, but those numbers only become valuable when you use them to make better decisions. Now let's further examine the business owner versus CEO mindset. Now I am not encouraging you to develop an ineffective corporate bureaucracy, but a CEO mindset is simply a different way of thinking. The owner operator mindset tends to focus on the customers that you have today and the problems that you have today, and of course the bills that you need to pay today, work that needs to be get done today. Now the CEO mindset adds another set of questions. Where are we going? What's working and what's not working? Where should we invest? What should we stop doing? What could prevent us from succeeding? And what does the business need six or twelve months from now? The owner has to handle today's business. The CEO also has to build tomorrow's business. The difference isn't your title, it's the perspective you bring to your decisions.

Set Real Priorities And Direction

Now let's discuss a few CEO focus areas to further develop this mindset. For CEO focus area number one, know where you're going. Many small businesses have goals, but not necessarily a strategy. Grow revenue isn't really a strategy. Get more customers isn't a strategy either. I want to encourage you as owner to establish three or four priorities for the next 12 months. Now here are a few examples. Let's say you want to increase revenue from $750,000 to $900,000. Maybe improve gross margin from 35% to 40%. Or build a two-month operating cash reserve. And also, this is a big one. Maybe you want to reduce dependence on your largest customer. If everything is a priority, is anything really a priority? The CEO determines where the business is going and directs resources accordingly.

Use Numbers To Drive Decisions

Now for CEO focus area number two, make decisions using numbers, not just your instinct. For this particular focus area, we are going back to the last episode about knowing your numbers. Business owners use judgment and intuition. Now those are valuable, but important decisions should also be made by evidence. Before hiring another employee, ask, can we afford the position and how much additional revenue or capacity will it create? Now before purchasing equipment, what is the expected return? What happens to our cash flow? Now before adding a new product, what's the expected margin? Before increasing marketing, how will we measure whether the investment worked? Now this is where the five numbers from episode four become useful. Your financial information shouldn't just document your decisions, it should help shape them.

Protect Profit And Cash

Next for CEO focus area number three, we want to protect cash and profit, not just revenue. Now this sounds a lot like episodes one through three of this series. Owners naturally celebrate sales. Now sales are great, but CEOs ask, was it profitable? Did it generate cash? Was the return worth the resources required? Do we want more business like this? Now, for example, a $100,000 customer that consumes excessive resources may be less attractive than several smaller, higher margin customers. Similarly, rapid growth that consumes cash faster than the company generates it can create serious financial pressure. Growth isn't just about getting bigger, it's about building a financially stronger business.

Delegate More And Create Leverage

Next is CEO focus area number four, and that's stop trying to do everything yourself. Now, if you are a solopreneur or a micro business owner, this will definitely resonate with you. In the beginning, the owner may handle the sales, the operations, all the invoicing, customer service, marketing, all the purchasing, and the administrative tasks. That may be necessary, but eventually it creates a bottleneck. What are you doing every week that someone or something else could do? That could mean delegating to an employee, maybe hiring a contractor, maybe outsourcing your bookkeeping or implementing some new software, maybe using some AI, or automating some repetitive tasks. What can only you do? Now for many owners, that includes fostering major customer relationships, developing the strategy, overseeing important hiring decisions. You also want to oversee the capital allocation, developing partnerships. You want to do business development, and definitely you want to structure the team culture the way you want it. Your goal isn't to remove yourself from everything, it's to spend more of your time where your involvement creates the greatest value. Now for CEO focus area number five, we want to build systems, not dependencies.

Build Systems Not Owner Dependency

This takes delegation one step further. A healthy business shouldn't depend entirely on what is stored in the owner's head. What happens if you're unavailable for two weeks? Can invoices still go out? Can customers get answers? Can employees make routine decisions? Does someone know what's happening with cash? Are critical processes documented? This is where owners need basic systems around your sales and customer service, the accounting, the cash management, purchasing, managing the inventory, doing the hiring, and also performance management. The goal isn't bureaucracy, it's repeatability. If everything requires the owner's involvement, you haven't just built a business, you've also built a dependency.

Weekly CEO Meeting And 7-Day Action

Now for action today, I want you to schedule some time every week to work on your business. This is the weekly CEO meeting with yourself, most likely. Now during that meeting, I want you to review your five financial numbers mentioned in episode four, like your cash position. Additionally, review the top three business priorities. Now, any major customer or operational issues, upcoming decisions, any risks and opportunities that may be coming up, and what requires action this week. Now, during this review, I don't want you to look at email, no customer work, no routine administrative tasks. This is strategic thinking time. Now for the solopreneur, this may be one of the simplest ways to begin developing that CEO mindset. So this week, schedule your first CEO meeting with yourself. Then answer these three questions. The first one is, what are my three most important business priorities? The next, what is the biggest financial issue I need to address? And then finally, what am I doing personally that I need to delegate, automate, or stop doing? Then choose one action to complete during the next seven days. Now over this series we've talked about understanding revenue and profit, managing cash flow, setting better prices, knowing your five key financial numbers, and now thinking more strategically about your role as the leader of your business.

Key Takeaways And What’s Next

Know your numbers, protect your cash, understand your profitability, make intentional decisions, and spend more of your time building the business you want rather than simply reacting to the business you have. You don't need a CEO title to think like a CEO. You need the discipline to look beyond today's problems and make decisions that build a stronger business tomorrow. I do hope this episode and this entire small business series helped you and your business. The next season of the Finance Leader Podcast starts soon. I am planning to cover specific topics about finance and accounting in the hospitality industry, so I can't wait to get that started with you. Have a great week. Take care, and thank you.