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Making Your Business Owner Independent
Let's be honest: many small businesses are brought to life by the sweat and breath of their owners. And while rolling up your sleeves and turning your passion into profits is admirable, if you remain the single foundational element of your company, it's harder to grow it into a mid-size business or large corporation. It also makes it harder to sell your company if you ever decide to. Here are a few reasons to make your business owner independent and some tips for doing so.
What Is an Owner-Dependent Business?
An owner-dependent business is any company that relies so heavily on the owner that it doesn't function well (or at all) without that person. The dependence can take on multiple forms. Common owner dependencies include:
- Consumer-centric owner dependence, which occurs when the owner is the sole reason customers are doing business with the company; take the owner out of the picture, and clients may drift away, taking revenue with them
- Process-centric owner dependence, which occurs when the owner is the only person who can perform certain critical processes on a regular basis; if the owner is gone for a long period of time, delays or shutdowns may occur
- Decision dependence, which occurs when only the owner can make a variety of decisions about day-to-day management of the business
The Limitations of Owner-Dependent Businesses
Many small business owners create owner-dependent companies inadvertently because they want to ensure the best possible quality or customer service and have trouble giving up control of certain processes. And while you never want your business to run without you knowing what's going on, keeping your hand on every lever or button creates limitations for you, your employees and your company.
- Employee limitations. When you don't empower your employees to own processes, it's harder for them to grow and learn. They also can't grow along with your business, and without such opportunities, they may learn what they can before leaving you for another company. That attrition increases your staffing expenses and means you never have the best staff you can.
- Business limitations. One person can only do so much, and if your company is owner dependent, business growth is lassoed by what you are able to handle yourself. Eventually, you'll reach a point where you can't personally support anymore growth.
- Owner limitations. When a company is truly dependent on you, you may not be able to take time off without handling phone calls or logging in virtually to take care of certain processes. That limitation can lead to early burn out and reduce your overall satisfaction with your business.
- Sales limitations. When your business relies too heavily on you, it reduces the overall sales value of the company. Entrepreneurs don't want to purchase companies that lose capability, customers or value as soon as the old owner steps out of the picture.
How to Make Your Business Owner Independent
Succession planning is one of the best ways to ensure your business is owner independent. Work on making yourself redundant whenever possible. Some steps include:
- Hiring staff you trust and letting them grow with your company. Teach key staff members to handle your responsibilities and let them step in to cover duties when you take time off.
- If you normally handle certain processes, create written documentation so someone else can easily handle those processes when needed.
- Introduce customers to your customer service and sales staff and allow those individuals to take on organic roles in client-centric work. You want clients to trust your brand and your people — not rely solely on you for everything.
Making your business owner independent is a great way to boost its value. If you're considering selling your company, talk to the brokers at LINK Raleigh (919) 299-9880 or email us firstname.lastname@example.org to find out what else you can do to ensure you get a great price.