February 22, 2012
Harvey MacKay (motivational speaker and author of Swim With The Sharks Without Being Eaten Alive and several other best selling business books) recently wrote an article about the dangers of being too self important in the world of business. His message was focused on how arrogance interferes with the critical skill of listening to others and other dangers of hubris. Yet I had a different takeaway, especially after reading this quote which his parents used to keep his ego in check: “Stick your finger in a bowl of water and watch the hole it leaves when you pull it out.” Message: life – and business – will go on without you. If you are a solopreneur or owner of a small business, you had better hope this is exactly what happens when it’s your time to pull your finger out of the bowl. Start now to lay the groundwork to leave no hole. The only hole you want to have to fill is in your piggy bank.
First, you have to accept and believe that your business can exist and succeed, without you. So many small business owners believe that what they do is so integral to the business that there will be no business to pass on, or sell, when they want to exit, quit, retire, pack it in, go fishing or just sleep. I’m sure there are examples where this is true, but in the vast majority of cases, it need not be true. Very few of us are so uniquely skilled or so iconic (think Oprah) that no one can fill our shoes. Hubris and self-importance and the natural human desire to think otherwise may rob you of getting a return on the investment of your time and skills over many years. So, how can you build a business to have value, without you? There are many things that need to be done, but here are some key elements to creating value that can be passed down:
- Operate as a business entity. Forming and operating as a legal entity, such as a corporation or limited liability company, makes your company a separate “person” under the law with its own legal identity. Shares of stock (or membership units in the case of LLCs) can be transferred to key employees or sold to a third party when it’s your time to exit. Treat this entity with respect; keep good corporate records, file annual reports and tax returns, and document key decisions.
- Document What You Do, and How. Develop the habit of documenting policies and procedures, systems and processes. It may seem silly to write down how to perform the steps of a service you do on auto-pilot every day, but if your way of serving clients is part of the value of your business – and especially if it took time to get it right — then write it down, or make a video of you doing it. Imagine if someone did have to step in and do your job; they need the recipe for success and it needs to be in Julia Child detail. Call this documentation The Operations Manual, The Secret Sauce, or My Priceless Pointers – whatever motivates you to do it. Someday this documentation will be more valuable than you imagined.
- Build Your Brand. While your name, face, contacts and skills may have built your brand, do what you can to give your company the brand value rather than making you the brand. There is a risk of always being in the spotlight, rather than showcasing your team or your method of doing things as what have value. Consider and compare these two statements:
- Melissa Taylor has been providing care management services for 20 years and she is available to meet the needs of her clients and their families.
- Taylor Care Management has over 20 years of care management experience and an empowering approach to meet the needs of its clients and their families.
- Develop Your Team. Even business owners who do not have employees use some service providers to meet business needs. The printer down the street, or online, who prints your marketing materials is on your team. Chances are it took you a while to find a printer who does a great job for you at a good price. All your work finding that diamond in the rough has value. Anyone who contributes goods or services to your company is a member of your team. Identify each person and company and their respective roles and responsibilities so that any future buyer can step in and enjoy this same smooth running machine you’ve developed.
- Track Your Revenue and Expenses. Picture the day when you want to find a buyer for your business and that potential buyer asks for all your old tax returns, your records of revenue and expenses, budgets and future projections. You want to produce impressive records, and not have to spend weeks of sleepless nights to pull together years of documentation that was never well organized.
The good thing about all these tips is that they will help you run your business better even if you never do pursue selling your company. But why shouldn’t you cash in on the company brand, customers, good will, website visitors, Facebook & Twitter followers, trained employees, innovative business practices and the rest of the blood, sweat and tears that any entrepreneur endures. Telling yourself that what you are building has value and making it so will get you much farther than believing your business is nothing without you!
Disclaimer: This article is not a substitute for personalized legal advice and should be considered an introduction to these matters, not a specific guide.
By Sheryl Hunter Esquire