Why Delay Action?
Timing matters.
Three decades ago, I launched my first business, Image Boosters Inc., when I was in high school, just one year before a recession.
Being inexperienced, when the recession hit, my buddies and I doubled and then tripled our marketing spending to get new customers. At the same time, experienced business owners were turning off their marketing spending to hunker down to see what happens during the recession.
Guess who came out of the recession stronger, with more customers and the best talent? That’s right, Image Boosters! The experienced business owners who pulled back were reduced to almost a solo-preneurer situation.
In hindsight, increasing marketing spending during the recession was a Bold Move.
According to McKinsey & Co. in their book Strategy Beyond the Hockey Stick, CEOs who make three or more bold moves are 48% more likely to achieve 30x more profit than their competitor. For every extra $1,000,000 of profit, CEO business owners gain $6,000,000 or more in valuation increase. This way, you get paid twice.
By definition Bold Moves are risky. Make sure that you have a financial navigator who establishes the Habits of Profitability to protect you from the downside.
More recently, I spoke with a CEO business owner. I am certain that tax credits alone will produce six to seven figures of immediate bottom-line impact the first year he files, then recur every year thereafter. Recurring revenue is my favorite. Plus, he gets the 6x multiplier to his valuation for every extra $1 of profit.
Getting a definite answer to the tax credit requires the work of a tax specialist (not your CPA) but doesn’t require the CEO to do anything. Yet, for reasons beyond me, the CEO never wanted to find out if the tax credit was real. In fact, he delegated the action to his business partner, who is the definition of the status quo. This is a missed opportunity for the CEO to do even better.
More cash in the bank and a clear financial flight plan forward are especially useful during recessions and growth periods.
Why Do CEOs Delay Action?
Too Many Options. It doesn’t take long for CEOs (like me) or their management team to develop dozens of options to improve their people’s well-being and business outcomes. Decision-making about what to do and when may become muddled. This is likely to lead to taking suboptimal actions or doing nothing.
They Don’t Understand the Opportunity. Carol Dweck writes about learning versus fixed mindsets in her book Mindset. Surprisingly, many CEO business owners have some degree of a fixed mindset. This causes them to bypass learning about a better way, no matter how low the fruit is hanging.
No Hurry. The CEO is sufficiently well that they don’t have a sense of urgency. On some level, they assume that tomorrow will be essentially the same as today. Yet, sudden changes in their health or the marketplace will prove otherwise. The status quo is an illusion because the world around us continues to evolve and change at accelerating rates.
No Money. They evaluate opportunities based on scarcity. Like the business owners from my high school business who cut marketing investments as they faced the recession headwinds. Given the vast options when using financial resources, it’s easy to choose a suboptimal mix so that there is “no money” for a better opportunity.
No Time. A real constraint for many business owners is simply no time. It’s common for CEOs to carry the weight of the world on their shoulders. Many are involved in sales, and delivery, have customers coming to them, and/or have a large number of direct report employees. We call this the “owner’s trap.’
The Consequence of Delaying Action
CEOs who are slow to take action, don’t take action, or take the wrong action are increasingly vulnerable. The right investments take the responsibility off of the CEO’s shoulders. This allows business owners to focus on their best use. Plus it makes day-to-day fun.
Furthermore, these investments build organizational capacity to perform beyond the CEO’s wingspan.
The right navigator establishes a clear destination, uses proven methods to evaluate options, and helps team members achieve flight plan follow-through by using daily numbers.
The navigator protects CEOs from the downside so that business owners are not leaving money on the table.
Let’s discuss how you could benefit by having a Growth CFO navigator working side-by-side with you.
At Foresight CFO, our Growth CFOs do Destination and Follow Through work with CEO business owners globally. We deploy Growth CFOs in 3-person teams to go well beyond what any One CFO could ever do. Schedule a 25-minute Discovery Consultation with me