Are you critical to the day to day operations?


In my experience, most small business owners believe they are critical to the day to day operations of their business. The smaller the business is the more this is true. It is important to remember that businesses dependent on the owner’s presence tend to have a lower value and can be tough to sell depending on the skill set needed. Most buyers are adverse to risk and a business that is dependent on the owner showing up every day certainly carries more risk. Risk obviously affects value. The best way to mitigate this risk is through “growing out” of the business. This means constantly working on the business instead of in the business. It means hiring people to do your job while you develop the next revenue generating opportunity. It means finding people that make you better and whose skills and experience you can leverage. It means adding processes to monitor the business’ performance away from the office so you maintain control wherever you are. It means surrounding yourself with the right advisors because you will not know how to do everything all of the time and doing it yourself creates more dependency.

The bottom line is if you want maximum value you need to detach the business’ dependency of you while maintaining control of the operations. You may never want to sell your business but if you need to its certainly nice knowing it has value and can be sold.