Most business owners dream of a business legacy and financial independence.
Many never reach their goals. But it doesn't have to be that way.
So what's the formula? It's basic: reduce risk, drive profit and build a team stronger than you are alone.
Think about it. If you were going to buy a business, especially now that you have experience of owning one, what would you look for?
Most likely something that has been producing a steady and growing profit, has nominal risks and has a team of people that can continue to drive the business and profitability.
Indeed, pretty basic. But the typical problem is in the owner's shoes – it's him or her. He has become so much a part of the business that when he is gone, so is the business.
The time is now to build that team that produces a steady and growing profit and reduces risk because they will be there after you depart.
Additionally, keep in mind, most privately held company sales require the owner to hold a note for some portion of the sales price, paid contingent upon the business performing in the future as it has in the past. Your team is critical to this performance.
Think of it like this – when the time comes, and you are plucked out of the business, no one notices, either from the inside, or the outside. That's when you know you have accomplished your greatest challenge as a CEO – how well you choose your successor and your ability to step aside and let them run the company.
The single biggest driver of your future financial freedom is your people. They are the ones who are going to drive future cash flow and success.
And that is what a buyer is going to buy – whether they are an insider (family or key employee) or an outsider.
Building this leadership team also starts to give the owner some time. As the late entrepreneur and author Jim Rohn said, “You can get more money, but you cannot get more time.”
You can't get more time if you don't build a team. And you can't get the value locked up in your business without a team.
So get to work. Figure out your successor. Mentor him or her.
Start involving him in your key relationships. Figure out if he is the right person. If not, move on and continue to find that person.
Your successor is your key to the gate out of the business.
Tom Garrity is managing partner of Compass Point Consulting LLC in Bethlehem. He is a certified coach with Gazelles International and a certified exit planning adviser with the Exit Planning Institute. Compass Point provides growth and business transition consulting to small- and medium-sized businesses. He can be reached at 610-336-0514 or firstname.lastname@example.org.