One of the defining issues in the value of a business, is the ability of the owner (shareholder or shareholders) to be able to leave the business for an extended period of time, and come back to one which has gained in value.
Relax. I know that your business is very unlikely to be able to boast this ideal. Why? Because hardly any businesses can. At the other end of the spectrum is the sole operator, for whom the business effectively ceases to operate when he goes golfing. So two extremes, and I know that 99% of my readers fall somewhere in between.
But I’m sure that very few would argue with the assertion that the more freedom the owner has from the day to day operations of the business, the more value the business has to a potential buyer. Generally speaking. There are some exceptions.
At the end which is dictated by the presence of the owner, the “business” is little more than a job, according to Robert Kiyosaki who bands “businesses” into three categories:
- Self employment,
Not dissimilar to the parable of “Wink”, a book easily available on Kindle, and well worth the hour or so to read.
There are several very difficult value hurdles to overcome, and owner autonomy is certainly one of them. It requires an enormous leap of faith from the small business owner in terms of trust, training and affordability. This is not a simple matter of finding five times as many customers to each spend the same money as your current customer base!
While a major catalyst to change is reading something like this, the biggest kick in the pants comes about by the survival instinct in the midst of a crisis, where an owner finds himself unable to continue without bringing in the necessary skills, trusting his existing staff members and just finding the money from his own holiday budget.
Those crises might be one or several of a very broad range – health, retirement, increased turnover, pedantic customers, loss or gain of contracts, new technology, and many more which you can probably add to to yourself. While most business owners recognise this imperative, the grind of developing the next big project, satisfying the order, ordering more supplies or generally managing staff, credit, cash flow and so on, takes an obvious precedence.
Nestled in there is “the next big project”. It may be time to make this your next big project, rather than wait for an enterprise threatening crisis. It could add millions to your retirement package in years to come.
- If you are solely responsible for your company’s sales, you have a problem
- If your customers insist on talking to you only, you have a problem
- If you are the only person responsible for product development, you have a problem
- If you answer the calls at night for the burglar alarm, you have a problem
- If budgets are drawn up with no input from any of your staff, you have a problem
- If management accounts are for your eyes only, you have a problem
- If you do not have succession plans in place for staff members who leave, die or get sick, you have a problem
- If you cannot go away for a week leaving someone else in charge, you have a problem
You will almost certainly not be able to tackle these all this month, or even this year. But perhaps you could deal with one of them. Others will follow as a result. Your business will become more valuable, and you will retire richer… one day.
A year from now, you will wish you had started today.