The Four Essential Duties of a Business Leader

Last fall, I launched a weekly internet radio program, “Ask Christina First.” (More details.) On my first show, in response to a question from a consulting client, I spent an hour discussing why leadership is so important for business owners, and what makes a good leader. This is the first of a series of blog posts extracted from that episode.

Listen to Part 1 of the Program:

Why is leadership so important when it comes to business? Leadership is the backbone of your company's structure—it guides your employees, defines your product and creates a bottom line for your business. Whether your leadership style is role model, delegator or servant, what’s most important is your willingness to lead. Are you willing to step into the role of leadership in your company? Interestingly, not all business owners are.

If you answered, “Yes,” you need to be aware that leaders have four primary responsibilities to their companies:

1) Monitor the bottom line.

As a business leader, it is your job to determine your product’s pricing, decide how to sell it effectively, understand your margin and make sure that your business earns the profit it requires. Even if your intention is to take care of your customers and to contribute, you have to make sure that your bottom line works. Without this, you will likely feel unsuccessful and want to shut the business down at some point.

One of my clients consistently discounted admission to her events so they would be more affordable. I explained to her very simply, “if you keep operating at a loss in order to take care of the people that come to enjoy your show, you’re going to have to stop taking care of them all together because you won’t be able to keep producing shows. Your business will have to stop.”

What is really kinder: to give away part of your margin and risk the bottom line or to price your product in a way that keeps your business intact?

2) Interact with and coach your employees and vendors.

You must define what your company stands for, bring that forward and express it clearly to your staff. After all, you are the one who has spent time going through the numbers, getting intimate with your product and creating your vision with care and thoughtfulness.

If you expect employees and vendors to automatically understand your company and its bottom line, then you’re going to have a communication gap. You’ll be frustrated when they don’t hear you—not because they lack intelligence or don’t care, but because it isn’t their creation, so they simply don’t have the background that you do.

When you manage and talk to your employees, remember to define your product, your mission, and your vision for the business, and be willing to communicate this with them. That is how they will know how to serve your business best.

3) Know and produce what is sellable.

As a business leader, you should have a good idea of what is sellable and produce that. You’re the one who created the business, so it’s your job to develop a viable product. You can create something that is truly brilliant, sweet, delicious, exciting, fantastic, kind, amazing…but if it’s not sellable, if no one puts their money down and buys it, then there isn’t any place to contribute this product.

If there’s no market, you have the option of giving the product away without charging for it. Of course, that’s a hobby rather than an income-producing business. Eventually, your instincts (and economic reality) will demand that whatever actually makes money becomes your first priority; your hobby will be your second priority, even though it is your love and your passion.

So you have a great idea, but is it sellable? Is it a product that people want? That’s a question you need to find the answer to, whether through your own research or by hiring a consultant.

4) Move your company forward so it grows.

While this duty might seem obvious, it can be a complicated issue. I often see three common reasons why business owners don’t allow their companies to move forward.

The first is simply due to limitation: there are only so many hours a person can work in one day, and many business owners are used to running their company by themselves. If your business is growing successfully, at some point when you just can’t work harder, smarter and stronger anymore, you must be willing to delegate part of your company to someone else. Otherwise it gets to a certain size and shrinks back down, which can become an ongoing cycle. Your business can’t grow any bigger than what you allow.

Another reason why a business can remain stagnant is because the owner doesn’t really want to be seen out in the world, so they intentionally keep it small. If you’re not willing to tell people what you do, have your business get recognized, or be regarded as an expert in your field, your company might be limited to just a few clients. While this could be enough to satisfy you, it’s not enough to grow your business.

Thirdly, some business owners just don’t envision themselves ever retiring. If you think you can’t be replaced, your business will live and die with you. A sad recent example was Steve Jobs, the late CEO and Founder of Apple Inc. It took a diagnosis of terminal cancer for him to understand that he needed to name his successor if Apple was to keep going. If you want your company to grow, cultivate it so that you potentially don’t have to be in charge.

Listen to Part 1 of the Program: