Some owners are fearful of making themselves dispensable in their business. They want to be in control and don’t want to pass control to others, even their offspring. Many others would like to take more of a hands-off role and be dispensable, but don’t know how to achieve it. 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 out from a business (as will always happen) by way of sale or family succession, it is essential that the business can run successfully under new ownership and without the involvement of the previous owner.
A business that runs successfully under management can be worth many times more than one that is largely dependent on the owner.
Sound strategy
It is sound business strategy to plan from the outset to have the business capable of running without the owner’s involvement being an essential driver.
The benefits are many, including a better lifestyle for the owner; more flexibility as to what they can 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 of 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 or service development
- Working capital
Sometimes a business takes the name of the owner and while this can often be an initial advantage - especially for personal service companies such as consultancies - 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 is too closely associated with the success of the business.
If this is the case, it should be recognised and, if possible, 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 it can be passed to others. Contact management software can be used to help in this.
The same approach needs to be taken 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 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 saving for owners to try and do it themselves.
Regular meetings should be held with senior people to foster communication.
Rewards should be given for innovation and people 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 dependent on the owner, but it also creates a better business.
The key is focus, focus and more focus on the business whilst still working in it.
And owners shouldn’t be afraid to ask for assistance to facilitate it.