Extracting Yourself from Your Business (Part 1)
People decide to start or buy businesses for a lot of different reasons. But when it comes to the long term outcome we find business owners come up with one of two options.
1. Sell the business in a way that maximises their return on investment
2. Continue to own the business and draw income from it while spending less time in it
Which of these two outcomes are you planning for? This is Part 1 of a 4 part series that helps you map how you can get what you want from your business.
To achieve either of these outcomes you need to build a business that doesn't rely on your presence to thrive and grow.
It's a hard reality for some people but investors want to buy the business not the founder. The balance sheet can be made to tell an inspiring story. However smart investors know when they have come across a business that offers an attractive return in both the short and long term. One of the tell tale signs is that the business owner has their "hands off" the operational aspects of the business and the business continues to be successful.
The story is the same for 'lifers', that is, those people who want to stay in the business for the term of their natural career. Eventually you will reach the point where life balance, and spending more time indulging other interests, will become important. You will want to be able to continue generating a good income, while gaining more flexibility and choice around how you spend your time. This will not be achievable if spending a few days or weeks away from the business sees the business going into decline.
So we recognise that every business owner needs to develop an exit strategy and you need to start working toward that from the very first day you are in business. It's the tiny steps you take on daily basis that add up over the years and will eventually liberate you from your business.
There are three steps to extracting yourself from your business.
1. Transferring your knowledge into your business through systems and processes
2. Shifting your approach from micro-managing to leading
3. Building accountability and responsibility in the business
Development is usually required not only in terms of business infrastructure but also in the personal skills and motivation of the business owner and employees.
Over the next three editions of Thought-Starters we will be looking at each of these steps in detail. We will look at issues such as how to replicate the seemingly unique skills of the business owner, how you can help staff become more responsible, the fine art of motivation and show you why good systems and processes only provide half the story.
How do you know when you have successfully extracted yourself from the business?
People at all levels within the business have a clear sense of identity and direction. They are all 'singing from the same hymn book'. They are taking ownership of the future of the business and the business continues to grow. People know what they are doing and are getting on with doing it. The business thrives while you have the freedom to choose how you spend your day.
You might also like to read:
Business Management Skills Tested
New data has shown that the majority of business owner-operators neglect their personal needs and have no plan to exit their business upon retirement. The survey indicates that only 37% of own..Read More