Is Your Business Too Dependent On You?24th April 2017
“It was the most stressful period of my life – I could not believe what they were doing with my business!”
I’ve seen several cases like this former client of mine: Entrepreneurs who are asked to stay on when they sell their business to a new owner.
It always ends badly.
The problem is that the owner has sold too early, when they’re still intimately involved with their company, and when their company depends on their skills and knowledge to function and thrive.
It’s not that they can’t accept suddenly having a boss, it’s that they can’t bear someone else taking decisions about the company they founded.
To sell your business, you need to make yourself irrelevant to it. If you don’t, people aren’t buying the business – they’re buying you.
And let’s face it. That is a substantially less attractive proposition to a prospective buyer than a company that works like clockwork, regardless of whether the former owner is there or not.
It’s also not great for you, either, for the reason outlined above.
The stage where your business is dependent on you, the owner, is called ‘Infancy’.
Michael Gerber, author of the E-Myth, has an interesting idea on how to help your company emerge from that state.
He says that you should try to build a business that you could franchise and replicate.
It doesn’t matter whether you have any interest in franchising per se, it’s simply a way to help you focus on building a business which isn’t dependent on any individual. Instead, you put in place systems and processes which anyone can use and execute.
That way, when the time comes, you can sell the systems and processes, and just step away.
A good example is financial systems, like the ones we put in place. You need to ensure that your company has smooth billing and credit control, outstanding cash management, the right accounting platforms, sensible budgets and risk management in place.
That way, your accounts are managed exactly how you want them to be, and even if your bookkeeper or accountant resigns tomorrow, someone else can pick up exactly where they left off.
Building these systems and processes does not happen overnight. It’s a long-term project, so if you have any ambition to sell your business one day, you need to get started now. (Systems will also help your business run more smoothly, even if you have no intention of ever selling it!)
There was some university research published this year which found that when male entrepreneurs looked at the logo of their company, they experienced the same surge of pride, hope and attachment as a father when he looks at photographs of his children.
No wonder we call the stages of a company ‘infancy’, ‘adolescence’ and ‘maturity’! And no wonder that man I mentioned earlier was so upset when somebody else started taking decisions about his ‘baby’…
If you want help systematising your accounts, get in touch. Even if you’re nowhere near selling your business, this is a crucial step in achieving a more professionally run company.