It is crucial to have a clear owner strategy that outlines the goals and priorities of the company. This strategy helps align managers, employees, and board members around common objectives and ensures that everyone is working towards the same vision. In this article, we will unpack the importance of growth, liquidity, and control in a business and how they play a role in defining success.

For publicly traded companies, maximizing shareholder value is the primary goal. However, most businesses are privately owned and controlled by individuals or families. These owners have the freedom to define success on their own terms. They may prioritize growth, liquidity, or control, or a combination of these objectives. It becomes a "pick two" problem, where owners must identify which two goals are most important to them.

Growth is often pursued to build long-term wealth, expand impact, or achieve personal satisfaction. Liquidity refers to generating cash flow for owners to use outside the business, such as funding lifestyles or philanthropic efforts. Control allows owners to make decisions and shape the company according to their values and vision.

The founders of a watch company, Elisa and Mark, found themselves surprised when they couldn't pay dividends due to a focus on growth that didn't align with their priorities. They realized the importance of clearly articulating their owner strategy and communicating it to the company and board. They then made the necessary changes to bring the company back in line with their vision.

Defining an owner strategy requires answering two fundamental questions: What are your goals, and what are your guardrails for the business? Goals can be centred around growth, liquidity, or control. Guardrails are boundary conditions that define what is in and out of bounds for the company based on the owners' objectives. These guardrails can be financial or non-financial and should align with the owners' priorities.

Creating an Owner Strategy Statement is essential to codify the alignment among owners and communicate the goals and guardrails to the company. This statement should be specific, rationale-driven, and revisited regularly to adapt to changing circumstances. It serves as a basis for decision-making and can be translated into a dashboard of metrics and targets to measure success.

By defining success and establishing an owner strategy, business owners can create a company that aligns with their values and priorities. It ensures that all stakeholders are working towards common objectives and increases the chances of long-term success.