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Success(ion)

Taylah Wallace - Monday, April 03, 2017

In 2013 the average age of a business owner was 58 and trending up.  Of these owners 64% would seriously consider selling their businesses if approached and 33% are relying on either selling the business or continuing in ownership to fund their retirement.  More than half (55%) of owners have no strategic plan.  Again, 55% of all exits from businesses are due to death, disability, bankruptcy, receivership/liquidation or just simply closing (presumably because they have no planned exit).  As such, more than half of businesses have no business succession which is potentially costing those owners lots of money.

According to Craig West of Succession+ (who specialise in business succession) the biggest depressant of value in small business is "owner dependence" (i.e. the business can't function without the owner).  So, in a sale situation, the key person, the person mainly responsible for the success of the business and who will not be in the business for the long term, creates at least the perception, if not the reality, of substantial risk for any buyer.

This begs the question,what should the role of the business owner be?  Should he/she be the primary revenue generator, the key sales person, the operations manager, the finance director etc. or, as is often the case, a combination of all of these?  Or should the owner be the "CEO" and utilising systems and processes to allow other staff to attend to these various important tasks?

Some owners will automatically respond that their business is too small for such a structure or they don't have the "right" people to make it work.  Well if you have a small business, how will it get any bigger if you are the business, given you don't have unlimited time (or skills)?  Have you considered using the digital revolution to your advantage to bring new people "in" to the business through outsourcing?

Of course, there's no "one way" to achieve success as a small business owner.  But it is ironic that, the best way to make your business more attractive for sale (even longer term) is to structure it for maximising profit (even in the short term) by using other people (staff, outsourced contractors etc.) and systems / processes to control and monitor performance in the key areas of the business.  Such a general approach can lead to growth in profits and quality of life for owners.

So, back to the original question, what should the role of the business owner be?  We think of it as a coach of the team.  Put simply, the coach must have a vision for the team, a strategy for how it will play, set team rules/processes, provide direction and feedback to players and monitor performance.  Sometimes the coach will also be a player.  But any playing coach who prioritises playing and neglects coaching is unlikely to have a successful team in the long term.

If you own a business are you coaching or just playing?  What is your vision, strategic plan, operating system for the business?

The success(ion) of your business depends on it.