|CEOs must learn to wear many Hats!|
A CEO of a startup has many responsibilities when creating a company for the first time. Everyone has a high level of dependence on the person leading the company and that person must meet all expectations of staff, the board, and investors. Entrepreneurs are busy identifying technologies, developing business plans & presentations, and trying to run companies on shoestring budgets. Occasionally, the CEO is the only employee in the company for significant periods. After obtaining funding, they must perform in order to meet expectations of the investment community.
People possess certain skills and need to learn others. It is hard to know what one does not know! Running a company is a learning process and nearly every day requires learning something new. No wonder that post close of a significant financing that one CEO asked me, “What is a CEO supposed to do?”
The skill set does not come naturally to many and the requirements are not instinctive. In fact, the complexity of the job is something that goes beyond what one can learn in books. The problem is that each day some new event arises that can potentially change the business. This requires constantly learning to address the event and make the best decisions as well as take appropriate actions. The results may be perfect or require modifications in order to end up in the correct place. Sometimes decisions are horrible and a complete overhaul is needed!
The list below covers things a CEO of a startup may want to be aware of before starting any new endeavor. You will soon be aware that the CEO has to wear many hats, so pay attention to number 6 as well as the others!
1. Lead & manage the company - Eventually, startup companies obtain funding and hire a team; or in the absence of funding they simply dissolve and go away. A successful financing usually occurs because of hard work by the founding CEO and the team, assuming the team is already onboard. Funded companies must deliver on milestones and promises made to investors. This requires strong leadership and management by the CEO. It is important to get the best the team has to offer; this requires leadership. It is also critical that the team focus on key and important tasks thus requiring management by the CEO. The more the CEO can learn about the business and the team, the better the ability to integrate these two required skills. You may need to learn leadership and management techniques over time. If you have never had such responsibilities, consider having mentors and advisors to provide advice and talk over issues.
2. Manage budgets & report on finances – Whether your company is private or public, you must learn to manage to a budget. Actually, you must first learn to create lean and effective budgets. Any funds raised must last to key events that will allow for the next financing or product launch. Running out of money is not something to experience, unless you enjoy the pain of a severe down round or closure of a business. The reporting aspect is essential to ensure that your investors know you are not wasting their money. If you are in a public company, it is a legal requirement and the CEO is obligated to sign off on the accuracy of the reporting. Inaccuracy in reporting can have negative consequences, some of which can be a legal nightmare.
3. Identify milestones & meet timelines – Milestones are defined prior to raising the first rounds of capital. The need to define the milestones never goes away and new ones are created annually. Either the Board wants them to rate the CEO performance or investors want them to monitor the progress of the investment. “Under promise and over perform” is often a good strategy because setting realistic expectations is a key part of a CEO’s job. No one likes surprises unless they are highly beneficial to everyone!
4. Raise capital – It is often said that a company is always in need of new money. The sources can range from sale of equity to loans backed by assets. CEOs in startups are always traveling to meet with prospective investors. These meetings help to pre-condition the equity markets by making potential future investors aware of your company. Stocks in public companies trade because there are buyers that believe the company is exciting and there are sellers that want out. Failure to have awareness in the investor community can result in issues for many investors. Learn more about this from the article, “Some markets are impossible to control.”
5. Seek & interface with investors – Investors in the company have ownership and must be kept happy. Investors will sell or take undesirable actions if they become disgruntled and poorly managed. Investors need explanations when failing to meet objectives defined by the CEO. They will need regular updates to see how their investment value is growing. Investors became involved because the liked the story. When the story changes, they must told how the changes will affect them. One of the most difficult times the CEO can experience is standing in front of a group of investors explaining why their investment is not doing well!
6. Everything else – In case you are not experienced in running a startup, this category is one requiring your particular attention. The facts are that the CEO is responsible for everything in the company good and bad. When no one empties the trash, it becomes your job. When someone quits, you need to find a replacement and maybe fill in while searching. The team may have personal issues, so you become a parent “like” and offer help, if appropriate. The company fails to perform; it is your responsibility even though you may be able to identify other causes. The CEO is the face of the company. The CEO receives the blame in bad times and congratulations for a fantastic job in good times. Do not underestimate the responsibility or effort required to create and run a startup!
7. Think Agile - Surprise, bet by now you thought there were only 6! Things rarely go as planned and many times the path to success is not a straight line. All too often events turn negative requiring you to find a way to reverse them or find a different route to success. Learning to think and act quickly in a most thoughtful manner is absolutely essential.
Taffy Williams is the author of: Think Agile: How Smart Entrepreneurs Adapt in Order to Succeed and the Startup Blog. Connect with him on LinkedIn, Twitter @twilli2861, ColonialTDC , Facebook, and Startup Group.