As a business owner, is it a good idea to hire a “professional president” to keep various managers focused? Today, we’ll present some potential benefits of a professional company president.
Shepherding Success
Successful business owners tend to run so many different parts of the business. As their businesses grow, they may hire managers to take on specific responsibilities. However, business owners may discover that keeping various managers focused can be a job in itself.
Hiring a professional president can help you remain focused on bigger picture strategies while reducing the likelihood that you’ll need to sacrifice tactical quality simply based on a lack of personal bandwidth. That’s because a professional president can focus strictly on managing the managers while you focus on bigger picture strategies for business success.
Why Consider a Professional President?
A professional president is, in many ways, a next-level manager. And next-level management is a key component of planning for a successful future.
That’s because next-level managers have a proven track record of elevating business performance in areas such as profitability and operational efficiency.
A professional president could help your business address the “silo effect.” The silo effect occurs when your company’s managers work well within their teams but may lack cross-functional communication with other teams. This lack of communication can create inefficiencies and unintended redundancies, which could negatively impact business performance.
If your managers do a great job within their teams but struggle cross-functionally, a professional president could help keep them focused and communicative on the path toward business success.
Effects on Business Value
If a professional president is an appropriate addition to your business—based on its size, how your managers work together, and your business goals—their addition could have a positive effect on business value.
A crucial factor for business value is how well the business runs without the owner at the helm. If a business relies on the owner to run well and the owner leaves upon selling the business, the business itself has little to no value.
This means that to receive full value, the business owner may need to work for someone else until the business can run well without them. Few, if any, business owners are interested in this prospect.
On the other hand, a professional president may be able to coordinate the management teams to increase performance efficiency and effectiveness. This, in turn, could make the owner more dispensable to the business, which means they’re better positioned to leave on their terms. (In planning for a successful future, an indispensable owner is an obstacle, not a benefit!)
Additionally, an Exit Plan may also include “golden handcuffs” on the president. Golden handcuffs are typically a set of rules that compensates an employee very well on the conditions that they reach ambitious performance standards and agree to stay in the business for a set time frame. And if they don’t, they don’t receive full compensation.
This could make it possible for you to keep your president active in the business even after you exit, positioning you to receive the value you need from your business to achieve financial security and other goals.
We strive to help business owners identify and prioritize their objectives with respect to their businesses, their employees, and their families. If you have questions on this topic, we can help with more information or a referral to another experienced professional. Please feel free to contact us at your convenience.
Imagine a world where your financial advisor, attorney, accountant, insurance specialist, and property/casualty advisor all worked together, like a board of directors on your behalf. This is the type of Collaborative Advisory Team approach we take in our practice. For many driven entrepreneurs, executives, and high-net-worth individuals, a Collaborative Advisory Team of professionals is the most effective and efficient way to achieve your optimal financial world. At Moneta, we’re reinventing the way you experience wealth management.
The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial professional. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial professional. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.
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Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.
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