As part of a series of insight articles to be published over the coming months, Chiltern’s partners reflect on some of their experiences gained over a combined 30 year career advising and investing in owner managed companies.
Lonely at the Top?
It’s a business cliché that is often questioned in today’s world of connections and networks however for entrepreneurs at the helm of a smaller mid-market company, leadership can indeed be a lonely place.
When businesses are starting up, the critical decisions that you make as a leader impact just a few people. Fast forward three years and the initial excitement and ambition can often be replaced by a growing sense of risk as the stakes get ever higher.
Setting and implementing strategy; recruiting for senior roles; investing in systems and technology; monitoring and driving performance; cutting headcount – the buck stops with the CEO. This is no more apparent than when there are difficult decisions to be made as when it’s ‘your baby’ the emotions run far deeper.
Augmenting your management team is one way of easing the burden of leadership and we’ve previously highlighted the value of recruiting a finance director [link] however when you’re making strategic decisions such as the merits of an acquisition or assessing the challenges of international expansion, having a third party or non-executive director alongside to consult and challenge your decision making can be invaluable.
This advice can come in the form of many guises and whilst it’s easy to turn to your lawyer or accountant, conducting a thorough assessment of your requirements before you make an appointment is critical. Fast growing companies often benefit from working with someone with direct experience of delivering and managing rapid growth. Sector veterans can assist in opening doors to new clients or senior hires although this value can be quickly exhausted.
Experienced non-executive directors, bringing with them the disciplines of monthly reporting and board meetings, are a preferred approach for most private equity investors. This works well when a company has achieved a certain critical mass and evolution. However for a lot of smaller mid-market businesses, a more hands on, flexible approach is required to provide support and tactical input on a daily or weekly basis.
Having a ‘critical friend’ involved to challenge your thinking, assist decision making, and bring a different, but informed perspective to opportunities and problems can transform performance and make it less lonely at the top.