“How dependent is the business on you?”
A key question from the buyer of a going concern.
The ideal answer in most cases is that it is not dependent on the owner. Ideally, the owner of the business has previously delegated authority and decision-making to an effective General Manager or management team. If the owner is still “The Decider” for the overall company or, in a larger business, if he or she is the primary executive in charge of sales or production, the buyer will want that owner to remain in place to ensure the best chance of revenue and income continuing as projected when the company is purchased.
Last year I was working with a customer who thought he had his leadership team in good shape for his exit, but he was concerned that he might have blinders on since he wasn’t often in the office. While we were talking about that (in terms of preparing his company for sale), I pulled together a list of leadership qualities from a variety of studies and white papers. Here is the list:
Some important leadership skills for Senior executives (CEO, CFO, Senior VP, GM, COO)
- Decisiveness – make decisions with speed and conviction, will solicit points of view but not votes, “kitchen cabinet” of trusted advisors who tell the truth.
- Adaptability – long-term thinking, ability to deal with situations not in the playbook, see setbacks as part of changing course vs. defeat.
- Reliability – ability to set realistic expectations and consistently deliver results.
- Communication – ability to motivate others and build teamwork.
- Engaging for impact – unrelenting focus on delivering business results.
Studies show that effective leaders
- Have a clear understanding of what is needed and driving people to perform.
- Are aware of their moods and their body language impact.
- Are calm under pressure.
- Instill confidence in others.
- Inspire others.
- Can handle clashing viewpoints.
Some of the Core Competencies
- Strategic thinking ability
- Business judgment
- Conflict management
- Financial analysis capability
- Industry knowledge
- Ability to manage executives or other managers
- Ability to communicate well and align people
- Ability to develop others
- Ability to work collaboratively
- Ability to maintain key relationships with other employees and other stakeholders including bank, accounting firm, legal team, customers, others.
The most important determinant of a leader’s success: Decisiveness
While he had his own observations about the team, he thought it would be a great chance to get feedback for himself and for the leadership team members in a modified 360-degree review. The goal was to solicit input from:
- The people who reported to the senior leadership team.
- Their superiors (in this case, an advisory board of retired executives from the region).
- Their peers in the leadership team.
- Themselves on themselves.
The consolidated anonymous feedback from those various perspectives is the catalyst for training and development targeted for that team and that individual’s needs.
He realized if he did the questioning, the results would be biased, so he hired a consulting firm to develop the questionnaire, receive the responses and build a report about the findings for the overall team and each individual.
The results: the senior team members found it to be a useful tool for open dialogue among themselves and the owner. For example, they found that they ranked well in communicating down the line but not as well in soliciting (or listening to) ideas from the rank and file for improvements. It is important how they would rank themselves and how others would rank them using independent standards. They were also able to appreciate the review as a cultural signal that this was not a command-and-control environment and that the impact they have on all their constituencies mattered.
By the way, another bonus that came from this study was the establishment of a team and process to collect, review and select suggestions for improvement from all employees. They were reviewed and as they were implemented, cash bonuses based on the value of the suggestion were given to the person who made the suggestion.
If you’d like to discuss how dependent your company is on you or the positioning of your company’s management team in anticipation of selling or otherwise transitioning your business, feel free to give us a call or email. We are also happy to discuss other ways to prepare your company for sale for now or for the future. We would like to discuss how we may be able to help you with that process. You can reach me via email: firstname.lastname@example.org or on my cell phone a: 224-688-8838. We’re here to help you Harvest Your Potential!