Varying perspectives on running a business
Owners, managers and employees have different perspectives on running a business – and rightly so. These three groups have job descriptions that are defined differently, their compensation incentives are varied, and they often have a business and work mentality unlike one another. In order to maximize the potential these three groups have to work together, communicate and leverage each other. Many of you are independent contractors and may read this and think it is irrelevant or even silly. Not at all. If this is you, it’s just that you have the unique challenge of handling all three of these roles.
Working in a small business, or as an independent contractor, it is very easy and understandable to be caught up in daily operations. It is important to follow up on leads, make appointments and work with customers. Nothing is as fundamentally important as closing a deal and bringing in revenue. I believe there is a time, though, when operators should take step back and consciously put on their “owner’s hat.”
The benefit of quarterly financial reports
It is well documented and discussed by probably-too-many 24-hour news channels and websites how important quarterly financial reports are for public companies. This is the public’s window into the company as well as a vital regulatory requirement to meet stock exchange and federal agency standards. Investor relations isn’t just for public entities, though. Any business that has investors is required in some way to report to them, and I believe they should go above and beyond to provide information, ask questions and request insight from these investors. It may seem a bit corny, but I also believe independent contractors and owner/operators will benefit from this exercise too.
Even if you are a real estate agent who works as an independent contractor, in reality, you are carrying out the functions of all three groups discussed above. You are the sole employee who is responsible for all day-to-day tasks. You are your own manager, making decisions on time management, marketing budget/allocation and branding. It is the role of owner that is often ignored though. An owner thinks about business strategy differently. An owner looks towards the long term and to maximize growth and asset value – and not just short-term cash flow or daily decisions. Employees are often totally focused on getting through the next hour or day or customer appointment, rather than taking time to develop a more efficient customer relations process. A manager might want a pay raise to buy a new BMW, where the owner might want to reinvest that money into an additional employee, a new website and increased marketing… and this “owner” path may allow the possibility to buy three BMWs a year down the road thanks to the short-term sacrifice (and, of course, great work from the employees and management).
This one move can improve your bottom line
I suggest that no matter how big your business is you take a half-day every quarter to put together a detailed investor relations report. Yes, even if it is just for you. This report should consist of raw financial data like a profit and loss report, a balance sheet and projections going forward. It should also provide insight about customer behavior, market trends, competition and strategy. Investors – or you in your “investor role” – will then be able to provide valuable feedback and ideas from this unique perspective. Forcing yourself into this role will free you from the details of daily operations and allow you to focus on long term personal and business goals, and the decisions that will help you best achieve them.
Adding an investor for your business is an enormous privilege and honor, and it means you have built something special that someone wants to own. Even more, it is an enormous responsibility. Whether this investor is simply you (your own time and money), a family/friend or a professional investor, the responsibility is the same. Never forget that you owe them. Communicate well. Leverage. Learn. Share your success. And yes, if you are an independent contractor and your own investor, then this means there is more for you!