How to Manage Your Financial Partners--Driver 5

We’re in the fifth of a series of seven posts that are introducing the Seven Business Drivers. The first and second drivers are you and your management team, respectively. The third is your broader team of employees. The fourth is your customers and the fifth driver are those people who supply your company with cash via investment or credit vehicles.

Richard Branson famously said he runs his companies on the mantra of “employees first, customers second and investors third.” Despite the success of his companies, many don’t follow his advice. However, when the other drivers are placed ahead of the investors or creditors, the business is usually quite successful. One of the biggest mistakes leaders make is to focus too much attention on driving value and returns for their investors. Success drives equity value and an ability to pay back creditors.

 This is especially true in the venture capital world where young entrepreneurs become CEOs for no other reason than an investor gave them money.

Investors and creditors are simple in their demands: they want their money back, plus a little bit more. That’s really it. They don’t want to be bothered with questions on how to run your business; they expect you to do that. They don’t even want to put placed first in your list of business drivers. They just want their money back, which means that they want your success.

CEOs and business owners who focus too much on investors tend to manage their business for the short game, rather than the long one. This is a reason Michael Dell took his company private and Elon Musk famously threatened to do the same with Tesla.

Investors and creditors also aren’t part of the “health” variables of your company. You, your strategic team and your employees need to be healthy, happy and aligned for productivity to increase. Investors not so much.

Focus on the first four business drivers and the fifth—investors and creditors—will get want they want and stay on the operational sidelines where they belong.

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Interested in business coaching? Have us put the 7 business drivers to work in your company. Write today: peter@Livefused.com