Owner managers of businesses are facing increasing challenges to see their business grow, succeed and for the owners to be able to achieve their ultimate goals and ambitions. The pressure to be profitable and successful has never felt as intense, driven by a daily bombardment of the latest challenges to hit the decision makers.
The sense of being overrun with the latest issue is impacting the time available to focus on making the business a success, not to mention personal and family lives. None of that is healthy for the owner manager, the business and its people. Ultimately, it is not positive for the country and the economy either. Each business we advise is different and faces its own unique combination of challenges, but there are consistent themes.
As owner managers, the need is to identify the challenges and have strategies to address them and to lead the business through change to meet these challenges head on and overcome them. Typically, those businesses that have support from advisers are united in their leadership and have clearly implemented strategies, can and will thrive and succeed. Those that don’t will muddle through, but some good potential businesses will fail or be sold in fire sales.
The common challenges and trends
- Dependency on owner managers: reliance on the owner’s knowledge, experience, relationships or decision making when they are also working in the business creates a highly pressured and vulnerable position. Freeing up key people’s time to focus on the business is essential and promotes well-informed and clear strategy and direction, informed decision making focused on the objective needs of the business and effective communication.
- Paralysis: typically, in owner managed businesses, emotional attachments, friendships or family dynamics weigh heavily on the decision makers and the best interest of the business is often secondary to preserving harmony and not rocking the boat. In the worst cases, this sees poor behaviours or performance ignored or tolerated; divisiveness in leadership teams, compromise and/or delay in decisions and actions.
- Loss of objectivity: commonly, objectivity is lost with the barrage of matters and the restricted time to think and respond. Owner manager outlooks can become very narrow and they often benefit from third party view- points, observations or experience.
- Financial constraints: as owner managed businesses are often established from personal savings or loans, a necessary focus on profitability and cash flow management is essential. In a world of widely fluctuating costs, this presents a challenge for budgeting, projecting performance and the need for investment.
- Technology: the question of where, what and when the business should invest and manage the cost of investment in technology to increase efficiency or productivity is always a difficult assessment.
- Operational decisions: the need for businesses to keep up with legal, tax and industry regulations is never ending and requires focus, support and attention. Often, these elements end up being put to one side and that often leads to unexpected liabilities, costs and problems.
- Planning for the future: whether succession, third party investment, phased buy outs or outright exits, all areas need to be considered, discussed and planned.
- People retention and recruitment: positioning the business to retain good people, recruit new talent and maximise productivity is a challenge in an ever more demanding world of work.
It is not only important to the owner managers that these businesses succeed and thrive. Businesses provide jobs, they are a hub of creativity and innovation, and they play an essential role in supporting communities and providing essential services. They also contribute a significant proportion of the tax take.
Arguably, owner managed businesses do not gain the recognition they warrant and deserve. The overwhelming majority contribute to society, the communities we all live in and are the lifeblood of the wider economy. They require support, guidance and assistance to thrive and succeed. It is fantastic and energising to be able to be part of the core of advisers who understand these challenges and enjoy helping, guiding and supporting businesses to succeed, and the benefit that ultimately that brings.
The challenges and pressure will undoubtedly continue; but owner managed businesses are nothing if not resilient, so the majority will continue to grow and thrive, but it is perhaps time they were given a break!
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