Many of my members first asked me “I am a successful small business CEO so what will executive coaching do for me?”
The answer is simply this: Many small business owners are high achievers and have high expectations of themselves and of those around them. Trying to run the business while troubleshooting problems and still finding ways to driving the business forward, often feels like trying to change the wheels of the bus while going down the highway at 100 miles per hour. But all too often doubts, uncertainties and a lack of accountability prevent them from doing everything that they could or should.
High achievers continually deliver results and they do it by performing at their best each and every day. Even the best sportsmen and athletes understand the need and benefits of having a good coach. It is not that they are not the best at what they do, just that it helps to have an honest outside perspective and an accountability partner. Similarly, small business owners are finding that in today’s dynamic business world, even high achievers can benefit greatly from the guidance, support and motivation that an executive coach and peer advisory group provide to keep them on track and focused on their goals.
Peak performance is based on a few key factors, and no matter what business you may be in, the fact is:
– Focused and well prepared executives achieve more
– Focused and well managed teams deliver more
– Well managed companies and teams deliver better profits, are more durable and enjoy more market share.
It is no accident that the majority of CEO’s that we coach have been able to create a stable platform and superior strategies that put them into their best performance yet despite the continuing poor economic climate.
So what exactly does executive coaching do?
Most small business owners and CEO’s work in a vacuum. The need to keep professional distance between you and your employees means that there simply is no sounding board or anyone to really discuss problems with. Often in business partnerships there are concerns and friction points that cannot be openly discussed. A common theme in initial discussions with prospective members is the lack of camaraderie and peer interaction.
A small business owner or CEO is doing the best they can and quite often doing many of the right things. But every CEO knows that there are always things that can be done better. Doing things differently or better requires change so working with an executive coach requires that the CEO be willing to accept and then lead profound changes on an organizational and personal level. Working with a peer group and an executive coach will get you there much quicker and more efficiently than if you tried to do it alone.
What are the advantages of working with CEO Focus?
Executive Coaching helps leverage the efforts of CEO’s with the opportunity and desire to grow to get them there quicker.
Executive coaching helps CEO’s to improve their own personal management and delegation skills in order to become more effective leaders
Executive coaching provides an opportunity for honest feed back and meaningful reflection to increase the awareness of the executive of how they are manageing the organization.
Executive coaching helps executives use other’s mistakes to learn. Everybody makes mistakes and learns from them, but the school of hard knocks is slow and expensive. Engaging a group of true peers to find solutions to problems that the CEO is experiencing, is a rare opportunity. The true power of CEO Focus lies in the group, all of whom are committed to each other, constituted from like minded professionals, and who are committed to giving and receiving open and honest feedback
Executive coaching helps executives review and learn from personal experiences. Through self-reflection, great leaders and peak performing executives are able to learn and grow. In order to be successful, executives need to look back at personal experiences and learn from them. Executive coaching plays a vital role here as executive coaches know how to spark the process of self-reflection so the executives can use the valuable learning, which accrues from this process and apply it to their lives.
The best way to clear your blind spots is to work in a group of capable professionals. Many CEO’s are not aware of, or may simply choose to ignore their blind spots. This is dangerous in a small company since there is not enough depth or breadth in the management team to compensate. Coaching and peer mentoring plays a vital role in clearing blind spots and bringing accountability to the equation.
Executive coaching helps executives balance conflicting demands and provides a sound reference point for balancing professional and personal priorities. Ultimately our companies are our babies, bore out of blood, sweat and tears, but should not define us. They should be a vehicle for us to achieve our personal goals since real success in life is solely determined on who you become, the character and attributes you develop, the people you help, and whether or not at the end of the day you were true to the most important priorities in life – namely: yourself and those closest to you.
Executive coaching helps CEO’s to learn best practices and skills that will directly help them and their staff to work more effectively. Goals and objectives derive from strategic planning but the journey is probably more important than the destination. Coaching and mentoring help get there in the shortest time and most direct way possible
Executive coaching and mentoring is a process that requires commitment. We understand that small business CEO’s are busy and often intend to do a great many things.
In 2012 social spending will eat up 57% of our entire national budget. This has grown steadily from an initial 1% in 1950 and as yet the trend does not seem to be slowing. In the long run the U.S. will have to cut social programs and increase taxes, but in the short run the U.S. simply cannot adjust quickly enough. Bottom line is we no longer have a choice. If the U.S. has to pay its debts and it can’t tax more, then it must borrow more. Well we continue to borrow more to try to fix the problem, and how and from whom we borrow is becoming ever more critical.
Why are foreign borrowings such a huge risk?
As we have seen graphically demonstrated in Greece, high rates of debt to GDP are the chief danger to any country’s economic future. Foreign borrowings of the United States currently present a clear and present danger to the U.S. dollar and to the U.S. financial system and we need to take it extremely seriously. We are not immune to economic aftershocks from our own or Euro Zone crises and even less so to a calculated attack on our currency. With China spinning the value of their currency to their advantage, simply because they can, all we can do is sit on the sidelines and hope that they continue to see us as being too big to fail for quite some time.
How does the U.S. then try to counter the danger?
Traditional responses have been the weakening the dollar relative to stronger currencies. Doing this with the Chinese yuan would previously have stimulated growth as relative labor costs sank in the US. But today, because of the shift in our economy to a service base, because of consumption, much of the benefit of this strategy simply passes through and leaks away to offshore manufacturing facilities.
Had our foreign borrowing been invested for roads, high speed railroads, new industries, cheap energy, airports, and to fund scientific research, the debt would self-liquidate. However like Greece, we used the borrowing to fund consumption so the funds are therefore liquid and currently kept in dollars a lot of which is with American banks.
Currency speculators are felt to be the least of Japans problems. That’s because when policymakers intervene to limit yen strength, as they did Monday, they square off against a formidable array of forces, including U.S. monetary policy, Chinese reserve managers and global investors from Texas to Tokyo united by one desire: to sell the U.S. dollar.
U.S. deficit back in focus
Market sentiment is turning against the dollar and it could get ugly in the months ahead, especially if there is a breakdown in the politically tense negotiations about how to shave $1.5 trillion from the U.S. budget deficit over the next decade. Failure to meet the November 23 deadline would trigger automatic cuts and, some fear, prompt another ratings agency to cut for the US.
If that happens, China and other large holders of dollars will likely increase efforts to diversify their foreign exchange reserves, placing considerable pressure on the dollar.
Potential dumping of U.S. dollars could all too easily start a run on the currency. The ensuing financial panic would tip our already precarious economy into a deep depression. No matter how much currency central banks use to try to manipulate exchange rates, the market always has more.
What then is the prognosis?
The dollar is still the world’s reserve currency, but that advantage doesn’t make the dollar bullet proof. U.S. dollars can be converted to yen or to euros. On October 17, China took a key step to internationalizing the yuan and making it an alternative to petrodollars if not an alternative reserve currency; Hong Kong’s Chinese Gold & Silver Exchange Society now offers gold quoted in yuan.
We have to tread carefully from here on out for we are no longer the big dog in the fight.
Realistic income and expense budgets are a great tool to help run a business properly. Operating without one is like going on a long journey to a little known destination without a road map or GPS. You may well get there but you have no way of knowing if you took the most efficient route – and don’t complain if you crash a few times along the way Mr Magoo.
On its own having a budget is no guarantee that you will run efficiently. Using one consistently will give you a way to know if you are on track to achieve your goals, in sufficient time to do something about it if you are not.
Now some businesses may be so lucrative that it does not really matter. The CEO can get away with doing what they please and without much in the way of financial controls. These businesses do exist but I have seen them get into serious difficulties extremely quickly, simply because they lack the basic operating disciplines to do consistently well in a volatile environment and do not even know they are in trouble till it is too late.
Some CEO’s avoid budgets because they feel they are not good enough at financial management. Kind of; don’t ask the questions that you really do not want to know the answer to. Others because they are not good at sales and the foundation of any budget is a realistic sales forecast so they never get out of the starting gate or wind up guessing wildly. But both styles wind up gun slinging, which history shows is not a profession that has much longevity.
Budgeting is not fun because it involves a fair degree of application and rigor, tough choices and sacrifice. What the gunslingers do not get is that it is actually worse without a budget, since you will get to make all the same choices but will be totally unprepared. Managing reactively will generally yield a sub-optimal result since it builds a culture that actually increases the inertia in an organization rather than reducing it. Being proactive reduces inertia and prepares the CEO and the organization to meet challenges based on a good understanding of what is playing out around them.
The US has enjoyed levels of unprecedented success and affluence over the last 40 years. CEO’s operated businesses and everyone made good money – often in spite of themselves. With the financial meltdown many previously successful business owners are struggling to figure things out. The picture of “normal” or “success” that they have in their heads is in fact not normal at all and success was more of a happy accident. Nice work if you can get it but the bottom line is that there simply is no normal and that the only guarantee in life is that things change. All we really need is to be able to do is meet these changes with vigor and confidence.
Budgets definitely help us do that, but are in fact a manifestation of an attitude, a will and most importantly strategic intent, that are the real keys to success. Good CEO’s are less worried about what they know, than what they do not. If you are not where you feel you need to be in accounting skills – it just takes some application and work to get there. You do not need to be an expert but you do need to know enough to have a meaningful conversation with your accountant and financial management team.
Using a budget is half the battle but I have seen far too many budgets that are merely lip service. The hardest budget to meet is one that has large stretch goals on revenue. We often set ourselves up to fail by doing this. Just because it is on paper does not make it true, as much as you would like to believe it or have your bank manager believe it. Setting unrealistic budgets nullifies their value the moment people realize that goals will not be met and there is no process in place or time available to address this.
Budgets are living things because success is relative. Sometimes just staying level with last years numbers is a tremendous achievement since all around you companies are dropping out of the sky.
Small business owners are at the highest risk for problems from one particular kind of romance.
The relationship I am referring to is a business owner’s love affair with their inventory! Not sure what you were expecting, but here it is – the ugly truth!
Eli Goldratt in his book, The Goal, argues that in accounting terms, inventory is wrongly classified as an asset. His contention was that it is in fact a significant liability. His view lines up in many ways with another book of that era, called “The Machine That Changed The World” which may sound familiar since in the 80’s it pretty well spawned the “Lean” movement.
Your inventory is probably not worth close to the 50c in the dollar that you bank will lend you on it. The only tangible value your inventory has is what you might get if you had to liquidate it all right now! Goldratt argues that inventory could quite easily become redundant at any time through forces completely outside of our control. Legislated changes, unfavorable macro-economic events or quantum shifts in competitive offerings which might leapfrog our own, could all make current inventory redundant in a stroke, leaving you at best with scrap value – and that is probably the best way to view it (at least in strategic terms).
So what does that mean in the life of a small business owner?
I have talked about the challenge of gearing a business so that your utilization is optimal. Larger businesses tend to gear more highly to run as light as possible on inventory. But then their challenge becomes that of feeding “The Beast”. The irony is that they feel that this is about the only way they can compete with smaller, more nimble organizations such as you. On the other hand, smaller organizations have an inferiority complex and are easily intimidated by the size and power of larger competitors and simply do not acknowledge or use their biggest advantage.
What the Lean movement found is that larger companies gear more highly from a financial perspective too, which means that their profits are far more susceptible to market fluctuations perhaps the prime motivator to even-flow throughput, which means that even though they have the capacity, they often build inventory to provide a base load for their facility. A friend of mine who is a logistics consultant made an extremely good living putting logistics and warehousing centers next to Coke plants when they were on their zero inventory manufacturing kick in the 80’s and 90’s because although the plant had Just-in-time production and zero inventory on site, to feed the beast logistically required massive infrastructure just outside the fence. The production control advantages of these philosophies are tangible but outside of that – who is kidding whom?
Problem comes in that most small businesses are not structured, motivated, disciplined or perhaps skilled enough to run Lean properly, so they default to seeking to even-flow their operation by building inventory too.
The chances are better than even that you are saying to yourself about now that his does not apply to you because you are in a service industry. Service businesses are unable to store their product so effectively they only have two options. The first is to queue their customers and the second is to gear up resources to meet the demand peaks. For them the danger of getting it wrong is either leaving business on the table or over-gearing their capacity and carrying needless costs.
Your demand is perishable in the sense that if you cannot deliver when the customer wants/needs it, they will go somewhere else. Having inventory is a means to ensure that you service peak demands, so in your case your staff and systems are your inventory. So you gear up and pretty soon you are looking at ways to even-flow to feed the beast too.
The solution is to accept that your biggest advantage as a small company is the fact that you have a low inertia. Whatever your industry, be extremely wary of building excess inventory. Stretch goals are good and very necessary, but I would rather leave something on the table and know that I am running at optimum levels and let my competitors beat themselves up trying to cope with my little present to them – the joys of dealing with manic feast and famine cycles.
Your Vision, Our Focus! You don't have to do it alone. CEO Focus is a national network of Consultants and facilitators that will get in the trenches alongside you and help you make your business great.