Business vs. Job
What's the difference between owning a job & owning a business?
First of all, if you can't separate yourself from your business, you own a job and it won't be worth much when you retire. On the other hand, businesses accumulate long-term value which can be sold or otherwise #monetized. So it makes sense that building a business is much more work and much more complex than building a job. To be clear, there is nothing wrong with owning a job. It can be very lucrative, provide freedom and the pride that comes with being your own boss. But there is a big difference between building a job and building a #business. Owning a job provides compensation only while you are working it that business owner/ operator role, but businesses can continue indefinitely without you.
How can you tell if you own a business or own a job? Try asking yourself, "would my business survive without me?” If your answer is yes, you have a business. If not, you have a job and unless you plan on never #retiring, you need to transition your job into a business. And the key to that is the quality and abilities of your #management #team. If you or other company owners stopped coming in for work, who would keep the company running? That should be your bench, your protégé, your apprentice, your future successor. Big companies have successors for all leadership positions, and you should too.
So make sure that person in the line of succession exists in your company and is being developed into their future potential role.
FOUR BENEFITS TO OWING A BUSINESS VS. A JOB
Believe it or not, you may want to retire someday or you could get sick or family obligations or other obligations could come up and your company will need to survive with our you. Think of your successor as an insurance policy for your company in the event of your absence.
Businesses without a bench will loose over 70% of potential buyers or investors. They may be left with only local competitors or buyers interested in consolidating operations. The #valuations of these kinds of buyers will be significantly lower, reflecting the increased risk associated with needing to find a successor to transition the business away from the current owner after a #sale.
Earn-outs can sometimes represent 15-25% or more of the purchase price and they are contingent on the company meeting agreed-on #performance goals during a set time after closing. So not having the right team in place that you can trust to run your business after it is #sold can cost you hundreds of thousands or even millions of dollars in lost earn-out #revenue.
Business owners have a lot of personal pride wrapped into the businesses they’ve built and they want it to continue performing well into the future as part of their personal legacy. They want the buyer that will be best for the company's future as well as for their employees. Companies with strong second-level management teams and identified successors who can continue to operate the business, enable a smooth transition to the new owner, giving the company the best odds for a long and #successful future.
Most business owners like the pride they feel being critical to the success of their businesses. But, #savvy business #owners put that ego aside and recognize that their business could run just as good or even better without them, if they have the right team in place. The less dependent the business is on you, the owner, the better.
So whether your company has just one employee or one hundred employees, if you have a succession #plan in place, you have a business with intrinsic value, and a company without a succession plan is just a glorified job.
Build your bench.
Slowly back away.
Start #delegating responsibility
Provide mentoring, feedback, and support,
Develop managers to fill your shoes
Dream Business Brokers:
Truth is, all businesses at some point, will #exit from their current owners in one way or another. The only question is: under what terms?
When we meet with business owners interested in #exitplanning and maximizing their business #value and sales price, we discuss how long they would like to remain active in their business, and in what role. We learn the strengths and qualities of their management team and we help formulate a #winning #strategy that will create a highly competitive M&A process yielding the #maximum #return.
These plans take time to implement and produce results, so start now! Contact us today to schedule a confidential, complimentary business building strategy session with one of our certified exit planners and we'll create a custom 40-page report outlining actions you can take to better transition your company from a job to a business.
call: (866) CA-DREAM