How to become a CEO

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How to become a good CEO

Every small business owner has to become a CEO
This doesn't just happen by itself you have to work at becoming a good CEO. If you've done any research at all you've probably run across the phrase, "You have to work on your business not in it." This is only partially true. For the new small business owner this is often so impossible that it's even silly to consider it. You may be the business owner but you're also likely to be the only employee. But even if you have five or ten employees, you'll be better served splitting your time between working in and "on" the business.

Why is this? It's the same dynamic at work in big business. If you spend all of your time working on the business two things inevitably happen. You over manage the business, and you lose focus on the core.

If you're business just does one thing, let's say you run a web site that sells software. If you spend all of your time working "on" the business you'll quickly run out of things to do. The core of your business is buying software, marketing the product, and reselling at a higher price. When you're first getting it off the ground that's a lot of work. But once you're established and you have a staff of five or six people working for you what do you do?

The story line that's been told a thousand times is you work on getting better pricing, you work on the marketing, or you fine tune the operation. Guess what? At some point this is going to start delivering a negative return. You just end up frustrating your staff, or you make a decision out of boredom that isn't the right decision.

This is the essence of becoming a good CEO. You have to know when to leave it alone. This is a judgement call. The CEO of General Electric or IBM has it easy (though they might disagree!). They can focus their attention on another line of the business. But if you're market segment is fairly vertical, you don't have that option. If all you really need is 8 hours per week working on the business, then spend 8 hours. The remaining time if you feel like you need to work, jump in and start helping in the business. There's nothing inheritanly wrong with this.

What if you don't want to work in the business? This is where you learn to become a great CEO. It's ok to diversify. And that requires working "on" the business. But don't diversify at the cost of the core. Diversify by building on the core, and keep the lines of business segmented.

Let's take our web software store as an example. We can look at two options. If the software we sell is sales automation and customer relationship software for business we can diversify nicely by just adding accounting software and business management software. That's nicely tied in to what you already do and doesn't require a lot of training and investment, and thus risk.

But suppose we want to start supporting the software we sell? Now we're in a completely different line of business, but it still flows nicely from our core. The way to do this is not to traing the packaging people in the support of the software, re-design the web site, and completely shift the marketing focus. This is what a bad CEO does. He rocks the boat with so much drive and energy that everyone is thrown over board along with the core business that was paying the bills.

The good CEO does his research and builds the expertise needed off to the side of the core. When the process is in place, he adds a link to the home page, or at each specific product page that says, "need support?". You might add a couple of additional pages explaining your support pricing and package options and even build a knowledge base with some free support added to attract repeat visitors and potential customers.

To become a CEO and crawl out from under the small business maniac role requires a balance of organization, delegation, and of course hard work. Within these factors there's one consistent thread, prioritization. When you decide to diversify your business, streamline the operations, or change suppliers, you do so with an eye on what the priority is. This is difficult for some so I tell them what I've always done as a CEO. Ask yourself the following question, "Will this make the company more money?". It doesn't have to make you more money today, but it better have a good chance of doing so in the future.

Become a CEO by getting promoted
If you are a director of VP level inside a mid sized company to become a CEO you must of course get promoted. Contrary to popular belief this is not always politics. The two most important factors are how well you carry yourself, and your decision making process. In very small businesses, and rarely in mid sized businesses you'll run across a CEO who behaves as a tyrant. There are only two logical reasons for this. The CEO doesn't know what he's doing and panics at every decision, or the guy really is a tyrant. Neither is good and it's a rarity that a person like this gets promoted to the CEO level. When it does happen it's usually the result of a board of directors trying to save a sinking ship. Someone who is out of control isn't going to build and stabilize a business. He may save one by cutting costs and overhead, but that's a short term fix. The inherent problems will still exist.

Your best chance of becoming a CEO rests within your ability to stay calm in any situation and make rational decisions that will positively effect the long term condition of the business.