If you own a knowledge-led services firm in a sector such as consulting, IT services or media and you want to grow revenues to, say, $30m, it is unlikely that the expertise of the founders will be able to drive this. What you need is a team of specialist C-suite executives on board.
However, at some stage a founders-only team will put a break on growth. Here are three reasons why founders maintain the status quo and fail to see the damage it may be doing to their business:
- Growth creeps up on you so you don’t notice the degree to which the requirements have changed
During the start-up phase your main focus will be delivering on your particular domain expertise, but as time goes by you’ll spend more time on anything from finances to dealing with people issues.
- You don’t know what you don’t know
Expertise in one area doesn’t translate to expertise in another. That means a subject expert in business intelligence in oil and gas won’t necessarily be a competent CFO.
- You think you can do everything (almost!)
Consultants are natural problem solvers, which means many believe they can solve the entire range of issues within their own firms. This results in them spreading themselves too thinly, which damages their business and home life.
The question is what should you do about this? Specifically, how do you create a C-suite team that will help to create equity value? There are five key steps:
- Define the Roles
Successfully growing a consultancy involves filling a large number of roles. Here is one way of summarizing what they could be, including a sub-set of responsibilities and associated metrics:
- Identify existing capabilities
Once you know what the roles and responsibilities of the senior team need to be, you can determine if the existing team is capable of fulfilling these roles or not. You should do this for the existing team, and for those who are coming through the organisation who you think may have potential C-suite capability.
- Create a development plan
Once you know what good looks like, you can map the current capability against that, identifying strengths and weaknesses, as well as potential. You should create a development plan for those individuals with the potential to make it to the C-suite to ensure they can grow into the roles you require them to fulfill.
It’s important to hire some new people for the top team as, not only is it unlikely that all the roles will emerge from the current organisation, it’s also useful to add additional skills and experience.
Of course, you don’t have to hire full-time people. ‘Fractional working’ is much more common now than ever before, so get someone part-time and let them grow with the firm.
Don’t scrimp on development investment. The C-suite is the team that will deliver the equity value of the business and investing in the on-going capability of those people will pay dividends.
If you want to grow equity value and then sell your business you won’t be able to do it alone. You’ll need a strong team to help get you there. Understanding the team roles, appointing people with the right capabilities, and ensuring the team works together are tasks that you need to think about sooner rather than later in order to smash revenue glass ceilings.
This blog is a condensed version of a more in-depth article. Click here for the full article on creating a c-suite to build equity value.
If you are preparing to sell your consulting firm and would like to discuss your plans, please get in touch.
Are you a member of Equiteq Edge? It’s full of content to help consulting firm owners prepare for sale and sell their business. Register here to gain full access.