The Four Hats That Every Business Owner Must Wear

In the book The Road Less Stupid, author Keith Cunningham provides fantastic real-world advice for entrepreneurs and business owners.

I especially enjoyed Chapter 6, where he talks about the four hats you must wear in business.

You have little choice but to wear many hats in your business. The key to successfully wearing each hat is to think purposefully about each hat, each role, with an eye to making sure you perform each role well… or that you have people around you that help you perform each role well.

This is a topic that challenges almost every business owner. Especially when your business is doing $1 to $5 million in annual revenues and you have plans to grow the business.

Here is a summary view of how Keith Cunningham describes each of the four hats:

Artist Hat: With this hat you are focused on what needs to be created. An artist loves their ideas and creations and enjoys seeing their creations come to life.

Operator Hat: With this hat you are focused on what needs to be done (especially on what needs to be done today). “An operator is a great technician who adds value through their time and effort. Operators focus on getting it done.” They are better than anyone else in the company at doing the work.

Owner Hat: With this hat you are focused on what needs to be structured, measured, planned, and delegated. “A great owner runs the business end of the business by measuring results and then either fertilizes the activities that produced the good results or changes the activities that caused the bad ones. Owners know and use all the levers in the business cockpit – particularly the financial statements, dashboards, and metrics of the business to help them make great decisions. An owner is engaged and involved in the planning, execution, measurement, and corrections necessary to proactively lead and manage the business and employees.”

Board Hat: With this hat you are focused on what could go wrong. “On how you can mitigate the probability of a risk occurring or reducing the cost if it does occur. A valuable board of directors uses the same skill sets and brain cells as a great investor does. The key attributes of both are the abilities to question, probe, think sequentially, substitute rational thought for emotion, anticipate crisis, predict 2^nd-order consequences, and identify risks. Unlike the other three hats, which are focused on the doing part of business, the board (or investor) hat is a way of thinking.”

He goes on to say:

Think of each role as a different hat that must be worn depending on what the business needs. When you add each hat to your wardrobe, it allows you to think about your business in different ways at different times.”

Which Hat is Your Favorite?

My natural skillset is wearing the Board hat… while at the same time helping a smart business owner understand and master the business end of the business.

I am not an operator at all. I wish I was… but I’m not.

My unique abilities are focused on the financial side of business. I orchestrate the Monthly Financial Rhythm of business to make it easier for the Business owner to drive growth, profitability, and cash flow higher and higher every year.

Here is a quote that speaks to the importance of the Owner and Board hat as you grow your company:

As a business grows (gets traction and scales), the additional skills required to evaluate and seize new opportunities, create enterprise value, and sustain momentum are all business related: for example, managing cash flow, hiring the talent, reading financial statements, creating a culture, refining the target market, designing the messaging, leveraging other people, delegating tasks, allocating resources, prioritizing, strategizing, creating dashboards, and measuring outcomes.”

Which Hat Needs More Attention?

Which hat do you spend most of your time wearing?

Which hat is NOT your favorite?

Which hat do you need someone’s help to cover that role properly?

Take a minute to read through the description of each hat/role one more time real quick. It is a beautiful way to summarize the many roles you must play, and play well, to create and grow a successful business.

Philip Campbell is a CPA, financial consultant, and author of the book A Quick Start Guide to Financial Forecasting: Discover the Secret to Driving Growth, Profitability, and Cash Flow and the book Never Run Out of Cash: The 10 Cash Flow Rules You Can’t Afford to Ignore. He is also the author of a number of online courses including Understanding Your Cash Flow – In Less Than 10 Minutes. His books, articles, blog and online courses provide an easy-to-understand, step-by-step guide for entrepreneurs and business owners who want to create financial health, wealth, and freedom in business.

Philip’s 30 year career includes the acquisition or sale of 33 companies (and counting) and an IPO on the New York Stock Exchange.

This book provides a straightforward, easy-to-understand guide to one of the most powerful financial tools in business: a reliable financial forecast. It will transform the financial future of your company and help you make better, faster, smarter financial decisions.

Too many entrepreneurs and CEOs today are feeling more like passengers than drivers in their business. They’re staring at their rearview mirror as they bounce along in the passenger seat. Their company is careening along on the highway of business as they wonder and worry about where their business might end up financially.

A reliable financial forecast solves this problem by providing a clear view through the financial windshield of your business. It creates the visibility and clarity you need to drive your company toward a bigger and brighter financial future.

What if you had answers to questions like:

What’s about to happen to my profitability and cash flow?

How much cash can we distribute to the owners of the business?

How long will it take to pay off our debt?

What will our taxable income be this year?

A reliable financial forecast puts the answers to these questions at your fingertips. It helps you take control of your profitability and cash flow because it gives you answers to the most important financial questions you have to deal with every day.

Put yourself in the driver’s seat of your business by tapping into the unique and exciting benefits that financial forecasting can unlock for you.

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If you already own the book, the free tools and downloads are waiting for you. Click here to access the financial spreadsheets, examples, rapid learning guides, and more.