At Scalex we focus on helping companies to scale and have a positive impact on the world. We believe the key to success is unlocking potential by helping entrepreneurs to master the owner role in their company.
The inspiration for this post is help you as the owner to understand what the critical mistakes are and how they can stop your scale up. This is the first step in avoiding them. To be aware and know when you are at risk of allowing these to happen so you can take action. At the end of the post you can also sign up to see the video from our webinar where we explain these in more detail.
This post is for: owners of companies
Time to read: 3 minutes
1. They do not know that the Owner role is a job!
After qualifying as an accountant I started working in Private Equity at 3i in London. This is where I was taught how to work as an owner. It was my full time role and something I received considerable training and support on. I was never on any boards formally and I did not perform any operational work in the companies we owned. My focus was ownership. As I moved on in my career and started working in supporting entrepreneurs I realised many did not appreciate or understand the owner role.
Many entrepreneurs and company owners orginate from the operational side of the business and grow into the owner role – without really reflecting on it. They are not conscious of it.
In my opinion your Owner role is the absolute most important job – and one that can make or break your scale up. You should really be curious, develop in this area and master all aspects of this. Most problems in the company can be traced back to the owners. And when we do this we also often find the owner role is not being respected or udnerstood.
This means that many critical owner tasks that are key to scaling up are simply ignored. They are unconsciously incomptent as a result. This leads to a number of problems and mistakes – which leads me to number 2..
2. Not taking care of talent
One of the first owner tasks I learnt was how to master talent recruitment. What role was I recruiting to? The Chair. You want the best person you can afford in this role and it is not easy to get this right. The mistake I see happening is really bad board recruitment or worse – you find a talented person but you do not take care of them or you pay really badly. This can have the knock on effect of talent not being taken care of in the rest of the business.
Too many times I have seen board members not evaluated, not asked how they are getting on, not motivated. Or there is simply no talent – no external board. The owners do not see it as an important area. This is a disaster for a scale up.
The other opportunity is also to bring in talent to support your owner work in the form of partners or suppliers. You should see your lawyer, auditor, bank, consultants as part of your wider owner team and take care of these people. The best entrepeneurs I have worked with have often managed this part well.
3. Letting greed take over
Of all the deadly sins I feel that greed is the one that can most commonly slip in the owners thoughts. It can sneak in when they are not concentrating. This often leads to bad decisions or actions that will have consequences on the scale up. Best example I have seen from my venture capital work is valuation. If owners are not balanced when looking at valuation they will limit the ability to unlock a scale up. You need to have a balanced approach which is a lot easier when you master the owner role (understanding how your company is valued is a key owner task). Greed can also lead to owner conflict, not treating talent properly.
4. Owner conflict handled badly
This is an interesting one. Running a company is challenging – especially when you are scaling up. So we expect their to be owner conflict. But if the owners are not working the owner role we often see that these intiailly small owner conflicts are not dealt with. They get infected and the owenrs avoid the issue and hide themselves in the daily operations. I have seen a whole partnership be affected by this and it led to ustomers and employees suffering as a result. Friends can be become not friends. It can stop financing and expansion.
So the key is to expect conflict. When we work with customers we map this as part of our Owner Directive work programme. We even note this in the directive to make it a “healthy” conflict. Make it less dramatic. It also reinforces the importance of having external neutral board members or owner coaches that can help resolve conflict.
5. No clear owner goal
Many business owners have operational goals or targets they have set up with their operational thinking. Unfortunately many do not set pure owner goals that are more specific to this role. This also means that they can also set more short term objectives and miss the chance to think bigger.
When you work with these true owner goals you can manage some of the key milestones on the scale up journey – such financing and new owner team members.
Summary and next steps
My favourite mistake to work with is the role itself. Start working with this now – understand it. The owner directive is a great way to start this process and you can even set a work programme for your owner tasks within this.
In the webinar on this subject we explain more about how to avoid these mistakes and you can watch the video by clicking on the link and signing up to our webinar programme. https://www.scalexgp.se/sv/webinars/ If you do this you can also book a free owner consultation with Magnus and myself. It will also mean you are invited to our future owner webinars.
Thanks for reading this post – hope you found it useful and good luck with your scale up!