Are you building a successful business or merely self-employed? There’s a world of difference between the two: one is a long-term money-making freedom-creating asset. The other is essentially still a job. It might be a great job, and it might be both profitable and flexible – it might be everything you want – but it’s not a readily saleable business.
New Zealand is full of entrepreneurs, but thousands own businesses that couldn’t run without them for more than a few days. If you are one of those Kiwi business owners, unfortunately your company isn’t worth as much as you might think. You could be growing a somewhat valuable client database, or even a slightly more valuable portfolio of assets – that could be enough. But you’re not growing a desirable, saleable business.
I’ve spent years – decades, in fact – creating a business that still runs when I’m not there. This has an array of benefits that go beyond saleability. One of the biggest bonuses? I can go on holiday with my wife without having to telecommute from the beach. Surprisingly few small business owners in New Zealand actually manage to do this. Feel like you can’t take a holiday from your business without causing chaos? You may fall into this category.
I don’t like being the bearer of bad news, but it’s best you find out now, so you have time to remedy this problem if you’d like to (not everyone wants to, and that’s fine too). Think about what you would want to see if you were buying a business. It’s very much like what you want to see if you’re planning on buying a parcel of shares. You’re looking for good management, strong and reliable profits, and a sustainable underlying business model. You’re not looking for one person who’s really good at what they do.
So what can you do to make your company run independently? There’s a lot of strategic thinking involved, and often some short-term pain. You need to have systems in place to help your team follow the correct processes without requiring your input. You need to show your customers the processes work without you there. If you’re in a service industry, you may need to specialise in one specific area and start creating packages to sell. Manage your cashflow so customers pay up front and your forecasting becomes predictable. (For a great case study, read Built to Sell, despite the fact that the author paints the accountant in rather a bad light!)
Making the right decisions now puts your company on track to be more valuable, more saleable, and a serious asset in your portfolio. If that’s what you’re trying to achieve, don’t keep on working away in a job where you just happen to be your own boss.
Need some help? Give me a call.