Financial

I was recently working with a midsize business owner/CEO who wanted to know if I thought we were headed to a recession or if what he was hearing on his favorite news show was true about how it wasn’t true and I said...

“TIME OUT."

They looked at me and it was silent for a few seconds, and I said, would you be open to a discussion about something? They said of course! I said, “What really is the #1 thing on your mind that we should be really talking about?” The person looked away, took a deep breath, and said, “I am really stuck trying to decide where to prioritize my organization given all the uncertainty I am hearing about.” They then rattled off several ideas that all sounded like great ideas to pursue to grow and the individual was very excited and passionate about all of them. They then shared all the risks of changing but they know they need to.

Sound familiar? It led us down a whole different path that ultimately uncovered what so many leaders struggle with when there is so much uncertainty.

When it comes to small to midsized business owners/CEOs, there are typically three reasons I see that lead to them stalling out in their growth.

Reasons Why CEOs Get Stuck In Their Businesses

A. They are paralyzed and work to rationalize why they have not changed anything they are doing, knowing that they need to. I hear things like, “I am too busy,” “Do you know how hard it is to find good help,” “I am still working on sizing the market,” “I think this or that,” “Do I invest, retrench, and just ride it out and hope for the best?”

B. They don’t know where/how to begin, or stick to what they know. This often explains why they use the phrases above as excuses for not moving forward.

C. FOMO (fear of missing out). If they were to prioritize they could miss out on something else so they keep all options open and see what happens.

The problem with all three reasons above is they risk creating financial, operational, and emotional issues that ultimately could take the company down—and result in employees losing jobs.

The Costs Of CEO Neglect: Financial, Operational & Emotional

When CEOs fail to address their reasons for getting stuck, A LOT can go wrong. Financially and operationally, there are potential revenue and profit declines, market share losses, and higher costs. Emotionally there will be decreased morale, increased stress, decreased trust, and anxiety without a clear vision and an effective communication plan.

FACT: The #1 mistake that small and midsize business owners make during uncertain times is failing to adapt quickly enough to changes in the market or consumer behavior.

This can manifest in a few different ways:

Sticking with the status quo: Some business owners may be reluctant to change their business models or processes, even when it becomes clear that the old way of doing things is no longer effective.

Clinging to familiar methods or routines: Usually, out of fear of the unknown, even as the business suffers.

Cutting too many corners: Conversely, other business owners may panic and overreact to uncertain conditions by making drastic cuts across the board.

Trying to save money in the wrong places: They may lay off too many employees, reduce marketing and advertising budgets, or stop investing in new products or services altogether.

Failing to communicate effectively: During times of uncertainty, it's crucial for business owners to communicate clearly and frequently with employees, customers, and other stakeholders.

Hesitating to share bad news or admit to uncertainty: Holding back on the truth can lead to confusion, mistrust, and frustration.

Over-communicating: Sharing too much or too vaguely may also create confusion and uncertainty.

The decisions above may provide some immediate relief, but they can hurt the long-term health of the business.

How CEOs Can Properly Assess Business Opportunities & Challenges

Here are ideas on how to assess the various opportunities and challenges you are facing:

1. Conduct a risk assessment: A risk assessment can help you identify potential risks and opportunities that could impact your business. You can do this by analyzing your business processes, reviewing your financial statements, identifying potential legal or regulatory issues, and assessing your competition. Once you have identified these risks, you can prioritize them based on their likelihood and potential impact on your business. Solidify your current business foundation first and foremost!
2. Develop a strategic plan: A strategic plan can help you prioritize opportunities that align with your business goals and objectives. This plan should outline the steps you need to take to achieve your goals, including the resources required and timelines for completion. By prioritizing your opportunities, you can focus on those that have the most potential to drive growth and profitability.
3. Seek expert advice: As a business owner/CEO, you may not have all the expertise required to identify and prioritize risks and opportunities. Seeking advice from experts such as consultants, lawyers, accountants, or industry peers can provide valuable insights and help you prioritize your risks and opportunities effectively. Joining peer advisory groups to bring outside perspectives in a confidential/safe place can confirm your decisions, catch risks you didn’t see, and/or provide new ideas for you to consider.

In summary, having a solid business foundation is crucial for a CEO before pursuing new products or services because it ensures they have a clear understanding of the market, and provides financial stability, operational efficiency, risk management, and strategic planning abilities.

Overall, prioritization is essential for small/midsize business owners to effectively manage their workload and achieve their goals. It's important to identify any barriers to prioritization and work to overcome them to ensure that tasks are completed in a timely and efficient manner.

If you want to connect with me to discuss further or provide other insights please let me know at [email protected] or connect with me on LinkedIn.