What is the Owner's Job?, Part 3

Too many times we see the general manager performing the function of a bookkeeper. Bookkeepers are vital to our business, but it’s not a line function. There is a reason that the chief of staff at the hospital is a doctor – not an administrator. There is a reason that the commander of a flying unit is a flyer – not a supply officer. There is a reason that the person running the business needs to be involved with the real business of the business. The reason is leadership. The reason is morale. The reason is you can’t drive a car by sitting in the passenger seat studying a map.

The general manager, however, has an important role in finance. After all, if the return on investment in money isn’t there – then we kill the general manager. So, the general manager in most small shops directs the work of the finance officer. The general manager reviews the aging report of receivables and directs the collection effort. However, it is the general manager who personally steps in on the tough cases and makes the final collection calls themselves.

The general manager directs the bills to be paid, but doesn’t write the check. The general manager generally signs the check in order to maintain security as well as to know what is really going on. Frequently one spouse will be the part-time finance officer and the other the general manager. Even in these cases we want the general manager to sign the checks, not because of security as much as maintaining contact with what is happening to the cash in the business. Surprising how we don’t spend as much when we actually sign the checks. This step alone has brought many general managers back into touch with reality. So, the general manager’s role in finance is to supervise cash management and make sure we meet all budgets. It’s not to do the work.

In this installment, we have examined the general manager role in recruiting and retaining workers; sales; price; and finance. Next, in our fourth and final installment, I will wrap it up in a big package. By the way, I told you it was a long and difficult answer to a short question.