Business owners should focus on growing their profits and meeting their sales goals. But to build “value” in your business and make it attractive to buyers, have you ever considered making it a primary goal to set up your business so that it can thrive and grow without you? A business that is not dependent on its owner to run it, is the ultimate asset investors want to own.
When it comes time to exit or sell your business, a company that can operate independently of its owner is worth a lot more than an owner-dependent company. Not only does that create “value,” but it gives you control over your time so that you can choose the most important projects to get involved in, and take time off for family and for vacations.
Here are 6 easy steps to take so that your business so that it can run without you:
- Give Your Staff a Stake in The Outcome: Create an ownership culture inside your company. Be transparent about financial results, and you allow employees to participate in your financial success. This results in employee engagement. With “skin in the game,” they are more likely to “step up” when you’re not around.
- Teach Them to Walk in Your Shoes: Consider a simple management technique where you respond to every question your staff brings you with the answer, “If you owned the company, what would you do?” By allowing your employees to walk in your shoes, you get them thinking like an owner. Soon, your employees will be coming up with solutions to problems on their own.
- Prioritize Where Your Time is Best Spent: Make a list of the products and services that require your attention, and add to it the functions you handle personally. Then score each on a scale of 1 to 10 by how easy it would be to teach an employee how to handle it. If it would be easy to teach employees to take over mark it a 10, and give a lower score to anything that absolutely requires your personal attention.
- Make it Rain: Are you the company’s best salesperson? If so, you can’t fire yourself as the company’s rainmaker, until you can hire someone to replace you. However, until then, you can create a recurring revenue business model where customers buy from your company automatically. Consider creating a service contract with your customers that offers to fulfill their ongoing needs on a regular basis, or depending on your industry something similar to an automatic replenishment system.
- Make Sure Your Company Comes With Instructions: Write an Employee Manual or a set of Standard Operating Procedures (SOPs). Start by breaking down your job into tasks, and then prepare instructions for your team that they can follow when you’re not there. If there is a rule book employees can refer to for repetitive tasks in your company, they will know what to do when you’re away. It also has an additional benefit – when an employee leaves, you can quickly hire and train a replacement to take on the duties of that particular job.
- Test your team: Take a few days off to test your team’s knowledge. See where your processes or procedures have holes. Plug the gaps with more details, invest in more training, and when tweaking things upon your return be sure to notice who stepped up into that leadership role. They might just be the person who can help you build a stronger foundation so that the business can be run in your absence.
Reach out to us: How well does your company run when you don’t show up for work? If you’re stuck, it’s worth asking if you have the right people in place to take your business to the next level. In the beginning, you will need employees you can trust and train to take on more responsibility. Then you will need them to grow, gain management experience and leadership skills. Be realistic about the time this will take. Be honest, if you have already been down this road, you may need to hire an experienced manager and proven leader to make the transition successful.
Let our team at TFG Business Advisors help you become a value builder for your business. Thinking of selling your business in 3, 5. Or 7 years? Build value in order to sell and then transition your legacy to your family – estate planning is not enough to build a nest egg for retirement and their financial safety net for the future. Want to know how? I am a Certified Exit Planning Advisor and a Certified Value Builder in addition to being a CPA, email me directly at LFuoco@Fuoco.com, to discuss designing a customized blueprint for you and your business.
