Core Competencies Hugh's comments 2019/05/15
Choosing a market sector is probably the most critical of all the decisions investors make when considering business opportunities as it’s obviously the foundation on which businesses flourish or fail. Critical as this may seem, when asking owners [shareholders] what motivated them choose a road freight enterprise, they either “inherited it” or “had a relation or contact in the business.” In other words, the opportunity presented itself – as someone needed to move a load and was willing to pay for the service rendered.
Few can argue that owning and managing businesses are two very different challenges. The million Dollar difference being – the first carries responsibility to manage the investment, the second to manage the company; service customers and [safeguard] employees’ job security; while preserving shareholders’ willingness to continue risking capital in low return situations. Essentially, both challenges require a Diligent, Resourceful, Deployment Technique. (DRDT). We believe this is a core ingredient in managing any challenge, so let’s delve a little deeper:
Diligent: careful and persistent work effort
Resourceful: the ability to find quick and clever ways to overcome difficulties
Deployment: bring or move into effective action
Technique: a way of carrying out a particular task especially the execution of a scientific procedure. A procedure that is effective in achieving an aim.
(Concise Oxford English Dictionary 11th Edition)
This Technique however creates problems for small business owners, where as the Investor, they are also the Manager who must fulfil both roles, this is where conflicting situations can confuse the situation.
Frankly, Investors should not get involved in the day-to-day “running” of their businesses, but limit engagement by delegating authority to their CEOs charged with the task of implementing highly competitive, low risk, investment strategies.
This is where things get confusing; Investors [shareholders] don’t face the realities of implementing unreasonable demands for a whole number of reasons, which we will address later in this discussion. In other words, there is a lot of wisdom in the saying: "Delegation is the Art of Good Management."
Another critical factor is that the loss of a CEO can have an incredible impact on a company’s trading results across the board, from reduction in earnings - influenced by customers moving their accounts to competitors - to total disruption of the workforce resulting in high staff churn and consequential loss of invaluable skills created over time.