Having trouble sleeping? Part 1
I speak to many Founder CEOs who can’t sleep at night. In fact, one CEO, after the successful divestment of his company, confided to me that this was the first Christmas he’d be able to take a real break without wondering if he would have to do some last minute fancy footwork in order to make payroll. Two thoughts struck me 1) I love how concerned he was that no staff member would be caught short over the festive period and 2) Wow. By any measure the business was really successful and yes cashflow had been tight in the past, but we’d done a lot of work in getting it to a place where it was well managed and there was really no need for that type of stress. But still that feeling stayed with him until he was no longer the owner of the business.
Over the years I’ve had many similar conversations with business owners who were struggling with having no one to confide in about the risk, the pressure and the options available for the business.
There are a few ways business owners can tackle this.
When starting a business having a co-founder can be invaluable. You’re in this together, you have a sounding board and someone to stress test ideas with. There can be draw backs however, make sure that you have a clear shareholder agreement that sets out, amongst other things, how equity will be split, how decisions will be made and what happens if one founder wants out. A business pre nup if you will. But a business marriage, like any other, really rests on the ongoing communication. Differences can be great, and I’d argue essential for co-founders as bringing different skill sets to the table is key, however ensure that any disputes or issues are aired quickly so they can be resolved and move on. If disputes get contentious an objective third party can be helpful to mediate the issue.
An advisory board, whether informal or a formal non exec board can be extremely useful in providing sound counsel whilst remaining one step removed from the day to day weeds of the business.
Often minority shareholders in the business, they have an interest in the long term success of the business. The key is selecting an advisory board with skills different or complementary to yours and ideally with deeper experience in business. The old adage of not wanting to be the smartest person in the room is definitely applicable here.
Mutual trust with your advisory board is vital, however it can sometimes be nerve wracking to be too open with concerns and uncertainty with your board which can in turn decrease the value you get from them.
Independent business advisors
Virtual C-suites are growing in popularity for smaller businesses. Whilst a business is too small for a permanent CFO, CTO or legal counsel they can benefit hugely from having these roles “on tap”.
The fact that these roles are not employees of the CEO also makes it easier to have more frank conversations about the risks inherent in business options being considered and any uncertainty being felt.
A virtual CFO in particular can help you sleep at night knowing that your financials are under control.
And once you outgrow the virtual support a good advisor will help transition you to permanent onsite support which fits your growing business.
In my next article I’ll explain how Lantern Partners are helping business owners sleep at night…