Today’s topic is the one thing that every business owner must do to successfully exit their business. It doesn’t matter who you’re transitioning your business to or what your time-frame is, you must do this for a successful exit!
In today’s video, I’m going to talk about:
- The one thing every business owner must do before they exit their business.
- Why it’s so important to make yourself obsolete from your business.
- How you can get started on ensuring that your business doesn’t revolve around you.
- And why change can be hard, but necessary!
Click here to watch the full video or read the full video transcript, below.
The One Thing Every Business Owner Must Do Before They Exit
Making sure that your business no longer revolves around you, is the single most important thing that you can do to grow the value of your business. When you make yourself operationally obsolete, this makes it attractive to not just a third-party buyer, but to an insider as well. You’re going to die and you’re going to retire and whenever that happens, if the business is still very attached to you, the business value drops like a rock.
Make Yourself Obsolete – Why It’s The Most Important Thing You Can Do
In the middle of May, I was in the hospital for three days unexpectedly, I had an infection. It just so happens that while I was in the hospital, I had to submit payroll. Luckily, there was a window of about five, six hours, that I was well enough to log into my computer and do that. It only actually takes me about five minutes, which is part of the reason why I haven’t yet delegated that. But it ties me, it handcuffs me to the business.
Had I not been able to enter payroll, that would have been a problem. I would like for my employees to get paid. And that really shined a light on the weaknesses of what I have not yet delegated and what I still need to delegate to others.
This story is relevant because one of the most important things that every business owner must do, is make themselves obsolete in the business. If you do not make yourself scarce in the business and gradually shift your responsibilities, particularly with day to day things like client relationships, it is going to be very detrimental to the value out of your business.
Any third-party buyer coming in, any key employee who wants to buy the business, they don’t want the business to revolve around you. It can’t revolve around you and if it does, you are leaving hundreds of thousands if not millions of dollars on the table.
Eventually, you are not going to be involved in this business. Whether that’s by choice or surprise, but the key is that you have a next generation management team that can do everything that you are doing. That’s the key and that’s what’s going to allow your business to have maximum value whenever you do decide to really seriously back away and exit your business.
Make Yourself Obsolete – How You Can Get Started
One of the keys to getting started with stepping back from the business is to start delegating. How you start is to delegate and move stuff off of your plate to other people in the organization. And you can do this slowly. It’s something that obviously take some time.
It’s important for the quality control aspect of managing your business, that you delegate, then you review and follow up and make sure that it continues to be done in a way that meets your expectations. And if it’s not done in a way that it needs to be done, that you continue to coach and mentor that person who’s doing that task so that it is done correctly.
Now this takes effort and this takes time. But not only is it central for the value of your business, it also allows you the freedom and the flexibility to back away and to focus only on those core things that you either want to be doing or need to be doing. You can focus on the highest value added tasks and start to delegate everything else away.
Make Yourself Obsolete – Why It’s So Hard To Do
Lastly, I want to address what might be going on in the back of your mind as you’re watching this video. And that is, “I don’t even know if I really want to make myself obsolete.” And it may not be a conscious thing in this reluctance to back away from the business and delegate tasks to other people, it may be a very subconscious thing.
But for most business owners, your business, is like another child. It’s your baby. Especially if you started the business, you founded the business, your identity in who you are as a person is wrapped up in this business, and so it can be very difficult to start backing away and even think about exiting altogether. I think this is a big reason why a lot of owners put this off for as long as they do. It’s hard to imagine yourself doing anything different than what you’re currently doing in running your business, owning your business and being involved in the business.
If you can take steps to make yourself obsolete and focus on just the core things that you enjoy doing and you can make the highest contribution with, it’s going to give you so much more freedom. Maybe you want to have an advisory role or want to focus on mentoring. The beauty of offloading a lot of these tasks is that you’ll get the added benefit of being able to coach and mentor your employees.
If you’re still present in the business, that culture that you brought into the business is still there. And you may decide that you don’t want to exit the business. Maybe you’ve been burned out because you’ve been working so much. As you delegate more and more, you could take a month off in the summer, go travel. Or, if you’re in the hospital like me, it’s not the end of the world. Your business still survives without you!