The role of a startup CEO is multifaceted, with myriad responsibilities that require careful balancing.
In this post, Michael Barry, CFO and Emerging Growth Practice Leader at Kranz Consulting, looks at the significance of a startup CEO’s time and how their strategic allocation of it can make or break the company’s future.
There’s an old saying in business – “cash is king” — but in the fast-paced world of startups, it’s time that also wears the crown. For founders and CEOs, every moment is critical to ensuring the success and longevity of their venture.
Effective CEOs understand what drives value in their company and spend their time and resources growing those drivers. There are three types of work for a CEO to focus on: managing cash, building the company itself, and everything else.
The Cash Runway
Cash runway refers to the period a startup can continue operating before running out of funds. Without cash, there is nothing to build, so it’s always the top priority.
For many startups, securing additional funding through investment or revenue generation can be a challenging and time-consuming process.
A CEO must not only lead the company but is the guardian of its financial health. Their ability to extend the cash runway directly correlates with the startup’s potential for long-term success; without cash, the patient is dead on the table.
As a Consulting CFO, I’ve worked with clients who have had as little as a single day of cash runway who then turned around for an eventual acquisition. Managing cash can feel like a distraction, but it is always the top priority.
For a software engineer, a biochemist, or a data scientist, financial statements can seem complex and distracting. Add into that mix the multitude of accounting standards, covenants, investor reports, and performance targets, and it can easily seem like a foreign language.
That doesn’t diminish the need for the CEO to stay on top of the company’s cash position. They are expected to understand where cash is coming from, where it is being spent, and how long it will last.
If they don’t have people who can explain this to them in terms they understand, it’s time to get people who can.
The Business Itself
CEOs are often pulled in many different directions, especially those in nascent fields where their talents are scarce, and their thought leadership is highly sought.
As the driving force behind the startup, the CEO shoulders numerous responsibilities. They are often involved in strategic decision-making, team building, fundraising, marketing, product development, and much more. With so much on their plate, time management becomes an indispensable skill.
Ultimately, it is the CEO’s job to create the thing that investors have supported them to do, either directly or by hiring a team to get it done. Without tangible, provable and material progress towards this goal, the investors’ support that initially showed promise will evaporate, and quickly.
To the CEOs reading this, your investors supported you for a reason. You will have to constantly remind yourself what that reason was.
Time management for a startup CEO is not just about being busy; it’s about being effective and efficient.
Every minute they spend on non-essential tasks or distractions diverts their attention from critical issues. This doesn’t mean they need to build the business themselves, but it does mean that they need to prioritize and delegate.
Everything Else
In the startup world, distractions abound. The CEO may be tempted to chase after every new opportunity, attend every networking event, or engage in tasks that don’t align with the startup’s immediate goals.
While exploring new possibilities is essential, they must not come at the expense of the startup’s core product and the preservation of the cash runway.
Learning to say “no” to distractions is crucial to staying on track and avoiding resource-draining detours. This is where a trusted, reliable, and skilled support network is critical.
One model that I advise my startup CEOs to consider is that they divide projects into four categories: do, delegate, defer, and delete.
Do: These are the tasks that should only be performed by the CEO. They will often require management of risk, strategy, experience, or a combination of these. Board relationships, legal matters, talent strategy, and risk management are all examples of this. Of course, managing cash and growing the core business are part of this category.
Delegate: Surround yourself with a capable network of people who can take things off your plate. A well-aligned team is critical to making a successful startup. This isn’t limited to direct-report staff; a network of effective and trusted vendors and/or contractors can often perform their roles as effectively and efficiently as internal staff.
Defer: One of the most difficult choices a CEO can make is to defer something that is important to them. Quite often the reasons to defer are driven by the availability of resources. In fact, the best reasons to defer are often counter-intuitive; implementing a software system may make sense in the long run, but if it will consume scarce cash reserves, it could be best off deferring until after the next funding round.
Delete: Quite often a CEO will need to make the tough choice to abandon a project or a work stream in favor of something more mission-critical. Staying mindful of the reason why investors came on board in the first place can often inform decisions to not stray from that core purpose.
A startup CEO’s time is a valuable and finite resource, making efficient time management crucial for success. By preserving the cash runway and focusing on the core product, the CEO can steer the startup toward growth and sustainability. Prioritization, delegation, and avoiding distractions are vital skills that every CEO should cultivate to maximize their impact on the startup’s journey.
Through these practices, the CEO becomes the driving force behind the startup’s success, propelling it toward a future of innovation and prosperity.
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