Being a business owner and a running a business can be the same thing and can also be very different.
Running your own business, often involves building and leading a team, it demands creating value, provides opportunity to nurture talent to grow and flourish and it allows enormous freedom to fashion an organisation in your own style and culture. People who run businesses come from many walks of life with varied professional skills, disciplines and in some cases no previous experience.
Not every owner or entrepreneur has corporate or management experience. Confusing the business with your personal assets, especially when it comes to cash is a common pitfall. You need to remember that the business is a unique business entity and not your personal piggy bank. HMRC have very tough measures and penalties nowadays for any inappropriate payments to owners.
As businesses grow the demands on the owner/manager change. Here are three areas to think about to keep your business healthy and growing.
1. Work on the business, not in it
The successful performance of a business is usually down to the right combination of skills that together can help you deliver a product or service to a market at an economically attractive price. The successful business will require financial investment of some sort to get started, to expand, to weather variable patterns of trade and to innovate.
When you are running a business you are accountable to the shareholders who carry the ultimate financial risk. They often provide a very strong, supporting and guiding role to the team running their investment. They can also sometimes have little or no involvement in the business.
When you own a business and run it you can often be the single arbiter of success and the distinction between the two can be blurred easily. The size of the business will often dictate the size of a team you have around you to share the various responsibilities, execute the business plan and service your customers. As much as possible you need to delegate the daily routines and responsibilities. A good Financial Director can take a lot of the corporate management and reporting off your plate.
Owning and running a business are two very different roles even if they are done by the same person. It is often said that running your own business can be a lonely place. This is mostly true if there is no immediate support network of professionals who you can share the objectives and the challenges with. It is also true that having the freedom and luxury of determining what happens and being able to directly influence success is very satisfying.
A regular health check on what you do with your time is always time well spent. Are you working on the factors that will influence your success or are you just working in the business?
2. Size doesn’t matter
On a day to day basis your owner’s hat can often be left at home. In the highly developed and organised structure of rules and regulations that business operate in today the job of managing a business follows a well-ordered path.
Irrespective of the size of your business it is vital that you establish and maintain sound principles such as board meetings, board reports and minutes and rigorous but appropriate processes. These will go a long way to keeping your business on track.
The pace of the business may not however be so well ordered with each day throwing up different objectives and demands: an RFP to submit, client meetings to attend, a VAT return to file, staff to hire, targets to review, products to purchase, cash to manage….. Having a sound base of principles to monitor and check performance by is critical to success.
Whatever your size and especially the SME’s, adopting the best parts of a larger organisation at the earliest opportunity will aid your success.
3. Business strategy and direction
As the business owner you need to be clear what your primary business objective is and be able to appraise the business away from all the day to day demands. Sometimes tough decisions are needed and clarity on what your strategy is will help you make these decisions when it really matters.
Key questions to ask yourself are:
- What am I aiming to achieve with my investment?
- If I have a plan to grow my investment, how am I performing?
- What funds do I need to grow my investment?
- Do I have an exit plan?
- Should I have an exit plan?
- What do I need to do to be exit ready?
- The list goes on……
Differentiating between being the business owner and running the business is an important distinction to make. It often takes building a team, sometimes small to start with, who can help set the owners objectives and monitor progress as the weeks go by and crucially adjust the plans and actions to keep the objectives on course. Often this team will be the same people working with you to run the business on a daily basis, although that is not always the case. In any event keeping the distinction will lead to a healthy balance of performance and challenge and see your investment grow as the reward for all the long hours of wearing many hats!
One of the team to help you remain focused and reach your objectives will be your Financial Director. For a flexible option contact Michael to see which FinanceHead can help you as a business owner and a director.