Happy New Year!
I hope you had a wonderful holiday season! I always strive to take a couple weeks off at the end of the year to enjoy the holiday season, family and festivities. This year was no different. I also use this time to establish and write down my business and personal goals for the coming year. For example, last year one of my business goals was to write 12 monthly newsletters to send out to clients and colleagues. While I didn’t quite hit the mark – here we are in January with my 12th newsletter – I feel pretty good about having reached out to you via my newsletter. I hope you found the newsletters helpful and thought-provoking. Let me know!
I can honestly say there were some setbacks along the way – not always getting the post out on the schedule I had hoped – and it wasn’t the perfect situation that I had hoped, but I achieved my goal nonetheless. The main reason that I achieved the goal was because I had a plan. Not only did I write the goal down, but also had a written plan on how I would achieve my goal. This year, my goal is to improve on last year!
What would you like for me to write about in my 2018 newsletters?
If you struggle to achieve your New Year’s resolutions you may want to check out this article from Fast Company and try employing the tips to help you keep your New Year’s Resolutions. If you are tech savvy and need a little help you can even check out these 12 apps that may help. This year, in an effort to limit my tech time, I have decided to enlist Michael Hyatt’s Full Focus Planner.
Whatever you do, cut yourself some slack. Even if you don’t achieve 100% of your goal, some progress towards reaching your goals is better than no progress at all. Beginning in 2018, we will take a look at some business goals you can set for your business and steps to implement them that will help you maximize the value of your business. Goals can be implemented anytime in your business or personal life – not just at the beginning of the New Year.
But first, let’s take a look at why your business may not be transferable.
Do You Own a Business or Simply Have a 'Job'?
In my previous newsletter, we discussed the Four Cs for creating additional value in your company. Another important way (one connected closely with the Four Cs) to make sure your business is as valuable as it should be is making sure you can answer affirmatively the following question:
“Can my business run without me?”
Let’s face it, many small business owners (myself included) start a business thinking that they will gain freedom, make more money, determine their own hours, etc. Over the course of my career, I have seen many want to be entrepreneurs set out to create a business but end up creating a job because they are the “go to” person for everything in their business. They are the product/service, the salesperson, the bookkeeper, and the janitor. Many think that they are “saving” a buck by not hiring personnel or outsourcing some of the day-to-day tasks and wind up trading their time for money. They end up being a hostage to their business working 50, 60 or 80 hours a week when they should be working 40.
If this sounds all too familiar, here are some steps you can take to become more passive in your company and maybe even gain some of your time back.
and Document All Processes and Systematize
If you sold your business today, could the new owner come in and run the business without your assistance and training? If not, and a lot of the “knowledge” of running the business is in your head, then you have some work to do. A good place to start is by systematizing and documenting all of your processes. Use the following steps to help you with this process.
Analyze all of the day to day tasks that you currently do in your business,
Create systems, or series of tasks, for the process in your business, and
Document those processes and update them periodically
Once you have done this it is time to determine which tasks could be done by someone else – yes, not everything requires you to do it. In his book, Making Money is Killing Your Business, Chuck Blakeman uses Process Mapping to help business owners understand processes in their business and which steps in a process should be delegated to someone with a lower pay-grade. It is a useful exercise, one I should take on myself. The end goal is to have all processes in your business systematized, documented, and performed by the right people making it easier for someone to come in and take over the task without being dependent upon you.
Hire the Right People
Now that you have systematized and documented all the processes it is time to hire the right people for tasks you should NOT be doing. I see so many business owners doing things in their business that they shouldn’t be doing because they “think” they are saving a buck by not having employees or outsourcing. Really? If you could spend that time doing something else, say, start working ON your business instead of IN your business or better yet, not working at all – why wouldn’t you? After all, isn’t your time more valuable?
Start by picking the simplest of tasks first that could be done by someone else. And then…LET GO! This won’t be easy. Delegating, especially for entrepreneurs, is difficult. There is the perception that you don’t have time to delegate, that you will lose control, or you can do it better. Time to put your fears and ego aside, which is easier said than done. Or maybe you have had a bad experience when delegating before. Here are some useful tips on delegation that may help.
Or, maybe it is the old chicken and the egg theory – I can’t afford to hire someone, it costs too much, I need to grow first. Truth is you can’t afford not to. There are several reasons why you should consider hiring/outsourcing:
You will likely pay more to have someone fix what you did because you thought you could do it “better and more efficiently” yourself.
You don’t have the time you need to devote 100% of your best efforts to every task in your business, and
Hiring the right people is an investment, not a cost. Change your mindset and instead of viewing as a cost consider the time that it frees up for you to do what you should be doing in your business.
Yes, profitability may dip in the short-term, but it is an investment in human capital (remember the Four Cs) that will allow you to grow your business today and make it more sell-able when you are ready to move on.
Once you have the right people in place, start building a solid management team. Whether you develop from within or hire from outside, having a strong management team will afford you the time to work on business strategy, step away from the business and make the business less reliant upon you.
Takeaway: Create a Business that is NOT Dependent Upon You
In order for a business to be desirable to a potential buyer, the business has to be valuable even after you leave.
So if you are the chief cook and bottle washer in your business you may have an uphill battle before you, but not an impossible one. This is exactly why it is difficult for small consulting or personal service companies to sell. The owner is the business. But, if you can systematize certain aspects of your business (Structural Capital), develop recurring revenue streams (think subscription based), and build a team of individuals (Human Capital) around you, you are on your way to becoming a passive business owner.
Not only will you create a more valuable business when it comes time to sell, but also have more fun running your business in the meantime.
And if you can’t create a passive business for yourself, either because you are the business or you chose to have a lifestyle business, at least know that you have a job and not a business and pay yourself well throughout the life of your business. There is nothing wrong with this option, just know there is not a payday for you in the end.
Take the “Keep or Sell Test” to find out if you should keep or sell your business!
Want to start working on your transition strategy? Ask me about my Transition RoadMap®. The Transition RoadMap® is specifically designed to help you begin thinking about your business as an outside investor would. Whether you are looking to sell your business or just want to enhance value, the Transition RoadMap® should be part of your overall business strategy.
Learn more about the Transition RoadMap® here.
Ready to get started? Email me or call me at 970-389-4802 for a FREE initial consultation.
Stay Tuned!
Next time we look at the importance of having a contingency plan in place. Have a great month!
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ETS Compass is my personal newsletter that provides thought-provoking topics and helpful guidance to business owners looking to navigate change in their businesses. Whether it is value enhancement or transition planning, it is my goal to educate you.
My goal is to provide useful and purposeful information to you that may help you transition from your business.
Author: Sheryl Brake
Sheryl is the CEO and Founder of Encompass Transition Solutions, LLC and former partner of a top 25 national accounting firm. She has been working with business owners in a wide variety of capacities for more than 30 years. Sheryl lives in her home state of Colorado with her husband, Michael.