Why did you decide to become an entrepreneur?
Most homeowners aspire to the freedom that comes with owning their own business: freedom to decide how you spend your time, freedom to choose who to work with and avoid people who drain your energy, or freedom to earn as much money as it deserves. This desire for freedom often leads owners to aspire to a bigger business, which they believe will give them what they want. Unfortunately, most homeowners who strive for more income or profit as their primary goal often have:
- Less time because they spend managing an ever-expanding set of offerings
- Less freedom because complexity inevitably leads to conflict
- Less money because available cash is reinvested in growth
So in many ways, growing a bigger business takes you further away from your ultimate goal of freedom. Rather than thinking of your business as something to push faster and faster, there is an alternative that can bring you closer to where you want. Think of your business as a child, your role is to guide you to become an independent and prosperous adult.
If your goal is to create a business that can thrive without you, start by making different decisions. That demanding client who wants your attention on their project no longer looks so attractive. That exciting new product that you are going to require me to sell just doesn't seem worth it anymore.
By focusing on the role of parent rather than driver of the business, the demand on your time decreases as your employees take on more of the burden. You may also find that your business sells more as you build a team of salespeople rather than relying solely on you to drive sales. The biggest irony is that your business may turn out to be more valuable than a larger pair where the owner is still primarily responsible for sales.
Buyers want businesses that survive the loss of their owner. In many cases, they will pay a premium for companies in which the owner is in the background. Consider the case of Damian James, who sold his network of mobile podiatry clinics generating $ 11 million in revenue for $ 13.2 million. He attributes much of the sale to the fact that he was no longer running the business on a day-to-day basis and had reduced his time commitment to one or two days a week.
David Hauser founded Grasshopper, an Internet-based phone system that built to $ 30 million in annual revenue before selling it to Citrix for $ 165 million in cash and $ 8.6 million in stock. Hauser was willing to work one day a week at the time of the sale of his business.
Increased income and profits will be valuable to an acquirer, but if you make it your only goal, you may find yourself with less than you want. Treat your business like a child who needs guidance to become a prosperous adult, and the income, profits, and bottom line will come as a by-product.
Source: The Value Builder System