This week I met a business that doesn’t have a managing director which is absolutely crazy. They are equal shareholders, they have a very good business that has lots of potential, they want to grow but they don’t have a managing director. when I challenged them on this, they asked me Well, what’s the point of managing director? Why do we need one? Why is it so important? 

Well for me, if you don’t have a managing director then you don’t have somebody there, that is able to make important decisions but also, you don’t have somebody that can cover the three most important outcomes of the MD role: profit and cash, strategy and team.

So as the managing director it is your job to make sure that your business has crystal clear profit goals and that your business model is correctly structured so that it generates sufficient levels of cash The pandemic over the last 12 months has taught us all the importance of having good cash reserves in your business so without a managing director well, who is keeping an eye on the profitability? Who is making sure that the business model is structured in the right way? who’s making sure that the budget is correct, that it is well thought out? Who’s making sure that there is enough cash coming into the business and planning that cash so that the business has good levels of reserves?. 

The next point is around strategy: often businesses are very tactical, smaller businesses are terrible at strategy, they tend to make short-term decisions, they kind of try and be all things to all people, they spend time and money on the wrong places. 

If you don’t have a clear strategy and if that strategy isn’t communicated and understood by everybody in the business, then you run the risk of going the long way around instead of the simple way from A to B, if you’ve got clear profit and cash goals then what you need is a very good solid strategy that helps you focus resources, helps you make great decisions and helps you understand which customers you should be focused on and which customers you shouldn’t be. 

Next is team If you don’t have a managing director you don’t have somebody that’s taking overall responsibility for ensuring that you’ve got an effective management team or senior team in your business. The managing director is there to ensure that you have the right people on the bus.

Next stop: on your business If you don’t have the right seats covered with the right level of skill

and if you don’t have the right culture amongst those team members then you’re not going to achieve the full potential of your business that’s why you need a managing director and if you’re the managing director, make sure that you are focused on those three areas: generating sufficient profit and cash in the business, making sure that there is a proper strategy in place and that it’s well communicated, well understood across the business and ensuring that you’ve got the right caliber of talent on your bus. 

If you’re looking for more small business tips, then we’d like to see you every week on “Mind Your Own Business,”

If you’d like help implementing these tactics then contact Marco Soares for professional coaching for business.