Why CEOs Need Trusted Advisors
This can be the difference-maker for small- to medium-sized businesses
Typically, CEOs and owners of private businesses have one regret at the ends of their careers – they should have followed their instincts and acted bolder and faster. The CEO title can be lonely, as they typically do not have people they can rely on to openly bounce off their ideas.
Often, leaders wonder whether their gut response would results in inordinate risk. This slows critical decision-making and creates the career-end regret. Confirmation that the contemplated action is well thought-out and risks are not catastrophic is all that is needed for a CEO to act. In the end, the CEO needs to own and execute: surrounding themselves with the right team to drive vision and immediacy of efforts.
Successful CEOs know nothing happens without strategy, structure and talent to support a focused vision and business plan. To create the strategy, it is critical the business starts with the purpose of its existence and moves to evaluating ways it can gain and sustain competitive advantage in both the mid-term and short-term.
However, many CEOs of small- to medium privately owned businesses do not have a Board of Advisors or Directors to help hold them accountable and direct the business toward the ultimate goal of monetization with an exit strategy or a successful generational hand-off. The alternative is hiring a trusted advisor to the CEO who delivers results-driven, professional counsel and solutions for complex situations.
The key benefits for the CEO and the organization to maintain a trusted advisor include:
- The CEO can think and act like an entrepreneur, focusing on business growth and customers
- A trusted advisor, who is an accomplished financial/operational executive, quickly understands the key issues and can support the CEO, providing alternatives and recommendations to complex problems as part of the decision-making process
- Allows the CEO to think strategically but provides additional bandwidth to implement effective tactics
- Drives the CEO and business to plan for the long-term, building annual business plans and three-year strategic plans
- Provides a higher level of analytical support relating results from operations to the financial statements and explains the variances in budget
- Helps identify key organizational initiatives on which to focus and structures a priority sequence
- Prepares the CEO and business for an exit strategy to monetize the investment
- Provides an external challenge to the CEO’s decision-making process. An advisor doesn’t tell the CEO what they want to hear, but tells them what they need to hear
- Ensures all perspectives are considered in the decision-making process to arrive at the best decision for the business
- Execute decisions – most businesses in crisis have the common problem of either not making decisions on a timely basis or making the wrong decisions
- Develop and implement operational plans based on the strategy developed in the business plan
- Uses prior broad-based industry experience to ensure marketing, sales, engineering, manufacturing, logistics and human resources are executing according to best practices
- Provides treasury and capital market support to secure funding alternatives and interfaces with the lenders regarding the performance of the business
- The trusted advisor becomes the coach, mentor and key confidant to the CEO and the one person the chief executive relies on the most for unbiased, straightforward communication
Some of the key benefits of a trusted advisor are:
- SUSTAINABILITY – Unbiased, on-target and unencumbered feedback.
- ACCOUNTABILITY – The more accountability the CEO and the business have, the better everyone will perform.
- FOCUS – The CEO gets to concentrate on the most urgent matters, so the company produces the results it seeks in business and strategic plans
- TRUST - The advisor demonstrates credibility, reliability, respect, acumen and transparency.
- COMMUNICATION – Free and frequently communication and a safe sounding board
- NETWORKING – Advisors typically have networks of business contacts that expands the CEO’s range of contacts
- SUCCESSION PLANNING – Together the CEO and his or her trusted advisor develop contingency plans to secure the enterprise value and increase its ultimate worth at exit or transition to the next generation
CEOs and owners of small- and medium-size businesses should have trusted advisors with financial and operational experience to supplement their skills and experience. The inclusion of this role to the leadership team enhances the overall capability of the business and is a key component toward achieving the future success of the business. This check and balance with a is a common thread that surfaces when examining successful CEOs.