CAN YOUR BUSINESS RUN WITHOUT YOU ?

Some owners are fearful of making themselves indispensable, not wanting to pass control to others, even to offspring. Many others would love to, but do not know how...

Should the business be able to run without you? The answer is a very definite “Yes”. If any business owner has doubts about this, the most compelling reason to avoid being indispensable is its negative effect on the value of the business.

When the time comes to move on (as will always happen), by way of sale or family succession, it’s essential that the business can run successfully under the new ownership and without involvement of the previous owner. A business that runs successfully under management can be worth many times more than one that is largely dependant on the owner.

So it is sound business strategy to plan from the outset to have the business capable of running without your involvement. The benefits are many, including a better lifestyle, more flexibility as to what you do with the business and better potential for its sale and growth.

One method of achieving this is for owners to identify the tasks they undertake in the business, and develop a plan to extricate themselves and involve others. But there are two imperatives – the business must have sufficient size, or be growing, and must be profitable. Without size and profitability it is almost impossible to involve others.

The owner of a small business is usually responsible for all the business including significant involvement in sales and sales development, ultimate responsibility for administration and accounting and control of finances/cash, hiring and firing of employees and dealing with employee problems, innovation and product of service development, and working capital.

Sometimes a business also takes the name of the owner and while this can often be an initial advantage – especially for personal service companies such as consultancy – it may prove a problem later. It is possible for the owner’s name and goodwill to become synonymous with the product/business, and to pass this on to successors, but it may also be a barrier if the owner’s expertise are too closely associated with the success of the business. If this is the case, it should be recognised and, if possible, the name of the business be changed before it does become a problem that affects the value of the business.

Where they are critical to a business, an owner’s sales contacts also need to be educated so that others in the business can provide the same level of service. The owner’s knowledge of personal relationships needs to be documented so that it can be passed to others. This is also true with any special product or services knowledge the owner may have.

Whenever practical, one executive should be selected as the second-in-command and taken into the complete confidence of the owner. Duties can increasingly be shared.

Usually an owner’s time is rarely best spent on the detail of administration and accounting. This can at first be outsourced and then brought in-house when the business warrants it. It is usually a false economy for owners to try and do it themselves.

Regular meetings should be held with senior staff to foster open communication. Rewards should be given for innovation, and people should be encouraged to think about the business as well as work in it.

The beauty of all of this is that not only does it allow the business not to be so dependant on the owner, but it also creates a better business.

The key is focus, focus and more focus on the business while still working in it. And owners shouldn’t be afraid to ask for assistance to facilitate it.