There are many parts to a successful business.  From loyal customers, to optimised supply chains, to an empowered workforce; the list is almost limitless of what can make a successful business.  But a few things remain common that are the building blocks to success.  The first is a product or service that is a resource that is inimitable or non-substitutable.  The second is an experienced business management TEAM in order to be able to leverage off this resource, now and into the future.

Large corporations have a business management team that consists of a board of directors and an Executive team that comprises of Executives such as a CEO, CFO, COO and so forth.  It is crucial for these larger businesses to have a board and an Executive team that collaborate and co-exist to ensure success.  But each play vastly different roles in doing so.

Boards and Executives are like Rally teams

I am a big motorsport fan; so to help build a mental picture of how they co-exist, I will use a motorsport example.  If we think about a Rally Car and in particular a Rally Driver and Navigator combination.  The Executive team would be the driver and the Board would be a navigator in this example.  One cannot exist without the other and have differing roles.

Boards are charged with the major decisions of the business and ensure that the business is keeping with its vision and strategic goals.  They routinely review performance of the business (and Executive team); look at big picture trends, set the long term strategy and ensure that the business is compliant. They are usually comprised of experienced business people and are not involved in the day to day management of the business operations.  So if we refer back to our Rally team example, being the Navigator, they set the direction and destination; understand the rules, and guide the driver to success.

The Executive team is charged with the day to day operations of the business. The Board appoints a CEO and then they in turn appoint varying Executive roles as required.  Each Executive is responsible for their little patch (CFO for finances, COO for Operations and so forth). But together, they lead the business in the direction set by the board and whilst they have an idea of the big picture strategy, they are more concerned with the NOW and current results of the business. So if we refer back to our Rally team; the Driver is in the control seat and is in charge of how fast or slow the car drives; steers away from danger and is guided by the Navigator to ensure that the best route is taken.

Implications for small business

But what do Boards, Executives and Rally teams have anything to do with small business and having a business manager?  A lot actually.  Let’s take our large corporation example and scale it down to small business.  Most small businesses wouldn’t have a Board, or an Executive team.  Chances are, the small business owner is the Board and the CEO.  This means that they are charged with setting the strategy and also implementing it, along with making sure the business is compliant.  In my 15+ years in business, I have seen far too often this situation with small business owners.  Simply due to time restraints, business owners are focused too much on the day to day operations, that they lose sight of the broader strategy.

Bringing in support

Fortunately, most small business owners realise that they need support.  Many are experts in what they do; be it customer service at a coffee shop, or wiring lights as an electrician, or having established an efficient supply chain for their retail business.  They are good at what they do.  If they were a CEO, they would be going really well.  But what very few owners have is financial understanding and business strategy understanding.  The ones that realise they need support bring in an accountant, in the hope they can be their one-stop solution.  The accountant will then boost the financial understanding of the business and ensure that the business is compliant with some aspects of our complex legislative system.

Unfortunately though, that is basically the limit of most accountants I have come across in my 15+ years in the industry.  They are excellent at looking in the rear vision mirror and reporting on past success.  They make excellent CFO’s and look after the ‘financial patch’ whilst complimenting the Executive team.  This is why it is important to have them in your business.  But it does not solve the issue of increasing the business intelligence and assisting and setting long term strategy (the Board role).

Business Managers – who are they?

Increasing your business intelligence is where Business Managers (or Management Consultants) have an important role to play. Yet most small businesses do not have one.  They have the business experience and knowledge of broader business trends and should have an MBA. They take an independent view point and if they are good, they will challenge the business owner on their strategy, operational management and also hold the owner to account for performance.  This is done not to bully, but to push the business owner to new levels of success.  A Business Manager focuses on more than just the financial aspect of the business and offer guidance on operations, technology, human resources, marketing, strategy and broader economic trends.  Understanding business is their ‘trade’ to be leveraged off and the independent aspect is important as they don’t look at the business ‘through rose coloured glasses’.

Getting the team right

Every small business should have a team of advisors, much like a large corporation does.  Obviously, the balance needs to be considered by the cashflow of the business to ensure that remuneration of these advisors can be afforded. But by only having an accountant and NOT a Business Manager means that the business would be missing opportunities for further success.  The role of the Business Manager could be a Board type role where they work closely with the business owner on increasing their business intelligence and can hold the owner to account for performance; or it could be taking on more of a COO (or CFO) role and work in the business with the owner as a contractor to enable the owner to think about strategy more.

Each business is different and requires different support and different times.  But I would challenge all small business owners that want to improve their outcomes and performance to consider expanding their business management TEAM to include a suitably qualified Business Manager that is NOT their accountant.  Like Boards and Executives have different roles to play, so too do Accountants and Business Managers.

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