Moving From Salesman or Techie to CEO - The Often Death Defying Transformation

Just like those acrobats who soar high in the air, then make a bold leap from one moving swing, to grasp at the handle of another, making the leap from worker, even a star worker, to CEO can be a death defying leap. The peril one hazards may not be to one's body but to one's business; a miss or a crash could have the same effect: disaster.

To manage a company requires different skills than those required to make or sell its products. Learning to manage is not difficult, but it does require shedding some old habits and learning new ways of looking at things. Above all, it requires the ability to communicate your vision. And, if you're not yet CEO, you might try thinking like a CEO of your career or your division. The good habits you acquire will help lift your career to a new level.

Harold Geneen, the great manager of ITT's then 250 some odd international companies in varied industries used to repeat: " Management must manage." He said it over and over until it was almost a mantra. What he meant was that a manager truly had to try to get this arms around all the relevant facts and information, then, whatever the facts were, he had to take whatever actions were necessary to carry out his company's plan and make a profit from the situation.

If times are good ,"management must manage". If times are bad, "management must manage." If there's no money, a disaster, a war, your product blows up in your face or you've run out of cash, management must still manage. In other words, don't complain, don't explain; try to figure the situation out, solve the problem, and do something to get moving again. Momentum counts . Confronting the problem and taking action reassures and leads on to success.

Peter Drucker, the management guru, pointed out there is no single "effective personality". Effective managers can be as different as night and day and the approaches they use can be equally different. "All they must have in common is the ability to get the right things done. Effectiveness is a habit, a practice of doing things, one step at a time, in a well thought out, systematic way." You will need criteria so you can establish which are the "right" things to get done, then you can focus on the important tasks which only you can do. To be effective, you must accomplish the greatest amount with the least wasted motion. The fewer people you need, the smaller your organization, the more effective and profitable your business will be. If you grow to be a giant, be sure all those people are needed because retrenchments are hard, and the more overhead you have, the more velocity you pick up when earnings start to fall.

The unfortunate fact of business life is that if you grow too fast, if you are not sure your earnings will either materialize or be sufficiently sustainable to support an increase in size, then growth can put your business at risk. Many dot coms suffered the ultimate disaster, death of the business, because they were encouraged to take first rounds of financing, load on the staff and overhead, then when earnings either weren't there or weren't enough to sustain them, and 2nd rounds of financing weren't forthcoming, had no choice but to shutter their business. Ironically, as mom and pop operations, they might have grown more slowly, established themselves in a niche, continued to prosper, and eventually become quite successful.

Develop A System

Developing a systems approach to your business is a good start to managing effectively. Big companies develop a system for doing things and small companies can do the same. In fact, small companies have an even greater need to develop a systems approach because they don't have the resources to be constantly making fresh decisions to handle recurring events. Every thing which can be made into a routine, should be, from the moment the receptionist or voice mail system answers the phone to the moment the customer or client completes the transaction. Every conversation, message, process and interaction should be recorded , a procedure developed and followed and a log kept on the process.

Set priorities and do first things first. Use check lists. In fact, as mundane as it sounds, one of the most effective and time saving ways to conduct business often overlooked by entrepreneurs, is to have a simple form or check list to cover as many things as possible in the daily life of the business. Keep a log, so you can manage by exception: if you usually have a certain volume of business on Wednesdays or in March, and suddenly your volume takes a nose dive, your log will tell you that; poke around and see what happened. Maybe the newspaper forgot to run your ad or the direct mail fulfillment house neglected to send out your catalogue. It pays to keep on top of those routine numbers.

An effective manager should try to focus on the strategic and generic instead of tackling problems as they arise. Again, make fundamental decisions and try to develop a policy, procedure or guideline for every conceivable situation which will occur in your business. Your time will be freed up for more important tasks and the regular day to day running of the business will be reduced to a routine. The definition of a "routine" is that it makes people with no management training capable of doing what it took only you, with experience and great effort, could figure out how to do before; a routine puts down in systematic, step by step form, what a very able women learned in surmounting yesterday's crisis.

A well managed business is one where paper work is organized, procedures are followed and there is a process at work. Crises or even urgent situations are kept at a minimum and when they do occur, you are free to deal with them. It is the unstructured nature of entrepreneurship and many small businesses which frequently drains an entrepreneur who must make hundreds of decisions a day. Try to put more structure in your organization and save yourself for the big moment, the huge contracts, the momentous decisions.

Focus on The Numbers

Business is about numbers and every business has a key set of numbers which tells a good manager how the business is doing. A seasoned manager who's been in the same business for a bit could run that business by looking at those numbers each day. The trick is first to figure out which are the key numbers for your business. They might be the number of papers you sold that day, or the volume of visitors to your web site, or the amount of ad revenue you brought in that month. Whatever they are you need to single them out, perhaps by seeking a point of reference such as a comparison with trade data of your industry. If every other major business in your industry needs a 50% mark up to survive and you want to do it on 20%, you better have a very clear reason why.

And of course, you can't possibly know if you're making a profit if you don't know what it's costing you to run your business. You may actually be losing money. In fact ,Inc. Magazine had a feature story, "Are We Making Money Yet?", which detailed one women's near death transformation from salesman to CEO when she finally puts pencil to paper to discover the real cost of a bike delivery in her mushrooming, but financially challenged delivery business was not the assumed $4.46 per delivery, leaving $. 23 profit. The real cost was $ 9.24 per delivery with an actual negative figure of -$4.55 . That is not the kind of situation you make up by volume. In fact, the more you sell, the more you lose. And it is a lot more common than most people, including business people, realize. Fortunately, getting these numbers turned around is not really that hard if you have a clear idea of the true costs. A little creative redeployment, some adjustments, and , believe it or not, turning away business--unprofitable business-- developing a plan based on the true financials and having the discipline to stick to it usually turn the tide and put you on the road to profitability.

So keep an eye on your gross profit. Focus in on your cost of goods and costs of sales. Don't take a contract just to get a contract. If it doesn't make a sizable enough profit, you don't need it. Know how much you need to break even every day. As painful as it may be in the beginning, create a budget and compare it with your actual revenue and expenses. After the initial shock wears off, things will get better. You will get a handle on the dynamics of your cash flow and that act alone will both improve your business and improve you as a manager, the beginning of a very positive and powerful cycle.

Communicate

Perhaps the most important change for a CEO, is to learn to communicate to the entire company everything he's learned, about the business and its numbers, about his vision and the milestones he sees along the way. As a CEO, you will move from being a team player to being the leader of the team and a member of the team at the same time. You must command and inspire, support and reward, and always, keep articulating your vision