In the dynamic landscape of entrepreneurial ventures, the dual role of an owner and CEO is both a privilege and a profound responsibility. This intersection, where leadership meets vision, is where the true value of a business is cultivated and grown. For small to mid-market businesses, where the owner often wears the CEO hat, understanding the core responsibilities of this role is not just beneficial—it's critical for sustained growth and success.
The Paramount Job of the Owner: Business Valuation
At the heart of an owner's mission is the enhancement of business valuation. This isn't just about the financial worth but also involves the intrinsic value provided to customers, employees, and the community. It’s a comprehensive view that goes beyond the balance sheets to assess the real impact of the business on its ecosystem.
The Four Essential Pillars of a CEO's Role
1. Strategy: Setting the Course through Marketing Strategy
The cornerstone of a CEO's job is to develop and refine the business strategy, which is fundamentally a marketing strategy. Aligning your 4 Ps of marketing—Product, Price, Place, and Promotion—to address the biggest constraints facing your industry is key to unlocking growth potential. This strategic alignment should be designed to overcome obstacles that prevent your business from achieving its full potential. The most critical Key Performance Indicators (KPIs) to monitor in this area are topline revenue and gross margin growth, aiming to achieve at least 2x industry growth. This approach ensures that your strategy is not just a plan on paper but a dynamic, actionable roadmap to success.
2. Leadership: Building an A-Team
Success in any venture is a team effort. A CEO must excel in hiring and developing a leadership team that embodies the company’s values and delivers exceptional results. This involves rigorous tracking and nurturing to ensure that over 80% of the leadership team are 'A players'—individuals who live the company's values and consistently achieve their goals. Achieving this benchmark sets a standard of excellence and drives the company towards its aspirations. The KPI to monitor here is the percentage of A players on your leadership team, with the goal being to surpass 80%. This ensures that your leadership is not only competent but also aligned with the company's vision and values.
3. People & Culture: Fostering Employee Engagement and Happiness
The culture of a company is its lifeblood. It influences every aspect of the business, from productivity to innovation, and ultimately, customer satisfaction. A CEO’s role in cultivating a positive, engaging workplace culture cannot be overstated. Through supportive work practices, behaviors, and opportunities for employee development, CEOs can achieve high employee net promoter scores (eNPS), signifying a workforce that is not only engaged but also advocates for the company. The KPI to track is the eNPS, with a target of over 80%, indicating a thriving and positive company culture that attracts and retains top talent.
4. Capital Allocation: Ensuring Growth and Returns
Efficient capital allocation is the final, yet equally important, responsibility of a CEO. Identifying the most impactful ways to deploy the company’s resources for growth and returns is a delicate balance that requires foresight, strategy, and a deep understanding of the market and the business itself. The successful allocation of capital should aim for a minimum Return on Invested Capital (ROIC) of greater than 50%. This KPI ensures that the company's financial health is prioritized and that every dollar invested is working towards substantial growth and profitability.
The Decision to Lead
While the symbiotic roles of an owner and CEO offer a powerful platform for business growth, it's essential to recognize when separate leadership could serve the company better. The vision to scale and the humility to seek talented leadership when necessary are marks of true wisdom and integrity.
As a business owner, embracing these essential roles of strategy, leadership, capital allocation, and culture will empower you to scale your business effectively. By focusing on the right KPIs—topline revenue, gross margin growth, A player percentage, ROIC, and eNPS—you can ensure that your business is not only growing but also thriving in a sustainable manner.
Call to Action
Are you ready to take your role as an owner and CEO to the next level? I’ve created a PDF guide to help you delve deeper into these essential roles and how to apply them in your business. Direct message me to receive your copy and start your journey toward scaling your business with greater effectiveness and purpose.