Having your business be totally reliant on you is not a sustainable way to operate, especially if you’re interested in selling. Potential buyers won’t see the value in buying a business if its key pillar (you) is removed once it’s sold.
If you’re experiencing this issue, the critical thing to know is that you aren’t alone. Whenever something is built from the ground up, you naturally get attached and become an essential part of that structure.
What’s important to recognise is that this problem is repairable.
The process behind replacing yourself can be a long one, but it is ultimately one of the best things you can do to increase your business’ value and eventually allow yourself to take a step back without the whole thing crashing down.
We’ll show you what happens when you don’t proactively think ahead about replacing yourself, why it’s important to you as an individual, and what replacing options are available to you.
Your Business Can’t Operate Without You
When you started your business, it was probably just you.
While the majority of the initial hard work, the numerous periods of growth, and navigating the ever-changing landscape of business is credited to you as the business owner, it does pose a problem — all operations fall on you.
Being such a crucial part of your business makes selling it a challenge because you hold most of its value.
So, how can you take that value away from yourself and transfer it to your business? The first step is simple – start making moves now.
Removing yourself from your business isn’t like ripping off a band-aid. It’s a long, slow process that takes time, energy, and dedication from you, especially if you’re the engine of the operation. You need to start considering how you’re going to separate yourself and pass over responsibilities early on into the process of getting your business ready for sale.
Richard’s Story
Richard had successfully run his business for a number of years. The needs of his clients, the day-to-day operations of the company, and the necessary processes were completely reliant on him.
When Richard was diagnosed with a life-threatening illness, he realised that he had no succession plan in place to keep his business running after him.
He had invested the majority of his life in running his business and didn’t have any family to pass it along to. All he had was his work and his clients; they were his family.
We realised that due to the rapid deterioration of his health, it was likely he wasn’t going to be able to find and train a suitable replacement in time. He had also not put in place systems that would allow a replacement to easily step into the role.
On top of him not having enough energy for such an involved process we also knew this would cause him great stress – which is something neither one wanted.
It was ultimately too late for Richard to replace himself in his business. When his health did sadly take a turn for the worst, he had no choice but to shut down his business and find alternative solutions for his client base.
Even in the midst of his illness, Richard’s primary concern was for his clients, and he worried about the lack of support he was leaving them. We recommended to him an accountant to help close out his clients’ files. This way, he could pass knowing that that client base he cared for so dearly had other options and were left in a good position.
Despite being able to carry out this small gesture, it nonetheless was heartbreaking to see Richard close down a lifetime of hard work.
Replace early so your business can still operate
We stress to our clients the importance of getting this process started early when you still have years ahead of you and plenty of energy to offer.
If your business is operating solely off of your existence within the company, then it’s time to start implementing a strategy to replace yourself.
Whether you are creating a succession strategy for retirement or as a safety net in preparation for the worst, replacing is necessary for the continuity of your years of hard work, and critical if you want to leave a legacy behind.
Taking a Holiday is Out of The Question
There are, of course, other, less ominous reasons to replace yourself in your business—the chief one being able to take time off.
Ask yourself this – are you able to go off the grid for a week and feel confident leaving your business in the hands of your employees? What about for just 24 hours? If your answer is no, then there’s a problem.
This isn’t just an issue for the future sale of your business. It’s also a problem for you as a person, who likely would like to be able to actually relax at some point.
The only solution is to review your responsibilities and start delegating some of your tasks to others, either utilising outsourcing or by passing on tasks internally. Initially, this may seem like a daunting task, especially if some of your daily activities have been yours from the start. However, you’ll be amazed at what happens when you do start to distribute the work.
Heidi’s story
After establishing herself in the manufacturing industry, Heidi poured her energy into growing an incredibly successful operation. Despite her success, she hardly had room to do anything else with her business taking up the majority of her time.
Heidi had a plan to sell her business in the next few years. She wanted to retire, take care of her health, and maybe even get in a long holiday. However, with most of its operations being dependent on her, she needed to start implementing strategies to make that dream possible.
Unable to see how she could offload her work onto other employees, we stepped in. As a result, we were able to identify one of her regular responsibilities that could be reassigned to someone else.
We discovered some of her activities were taking up a lot of her time, yet could be performed by someone else. Heidi listened to our advice. She promoted a member of her staff into a leadership role, delegating to them the majority of her key (yet time-consuming) responsibilities.
By relinquishing those activities and handing on other activities, Heidi not only grew her business but she also freed up an entire day out of her week. She was given the gift of time—time to spend on her business’ growth and time spent for herself. She instantly saw the value in handing over some of her duties and continues to delegate tasks, helping her business get in a better position for sale.
With the extra cash her business was generating, she was able to take an even longer holiday than she initially imagined.
Replacing equals more time
The more responsibilities you allocate to different members of your team, like in Heidi’s case, the more time and space you give your business in order for it to grow.
Once you have that time given back to you, it’s up to you how you spend it. Either you can take a much needed break, give yourself some space to breathe and refresh before you tackle new opportunities or you use that time to focus on growing your business and building its value is up to you.
No One Else Can Do What You Do
One of the hardest parts about replacing yourself is figuring out what tasks you don’t need to do and who you should replace to do them.
There will be high-level responsibilities that can’t easily be passed on and will require a more extensive hand-over process. As these blatantly take up the most time and likely offer the most value to the business, it’s easy to assume that they should be the first ones to go.
However, while the smaller tasks seem minor, the truth is they are part of a much larger picture. The roles they play are necessary for your day-to-day operations. By keeping those fundamentally key tasks to yourself, it makes it impossible for buyers to see the value in your business.
When you start to relinquish more minor responsibilities, you’ll ultimately be laying the groundwork for your business to be able to run without you, therefore making the business more valuable, not just you.
David’s story
David had been running his professional services business for a number of years and was starting to think about his exit. He knew that he played a central role in his business, and he also knew that wasn’t sustainable and wouldn’t pique the interest of any investors.
We identified that his bookkeeping activities were taking up a lot of his time. However, instead of going through the process of hiring or training an existing employee, we offered a different solution: outsourcing.
Outsourcing is an ideal, cost-effective, and time-saving solution for businesses heavily reliant on their owners. It can take the pressure and a lot of responsibility of the owners and even allow for more flexibility for other staff.
Our suggestion was that David outsource his booking a to a virtual assistant (VA).
VA’s have increasingly become more popular in the last few years, and the pool to choose from is constantly growing. David was able to find someone with the right skill set for the job more quickly than if he hired a full-time employee to work internally. He then had someone on hand to take over the busy work needed for daily operations to work effectively.
This then freed up a large chunk of his time, so he could focus on growing other areas of the business and getting the business as a whole more attractive to potential future buyers.
Outsourcing can help you replace
In David’s case, we were able to show him what activities were taking up the most time and find the best solution for him.
Outsourcing a portion of your responsibilities as the business owner creates a higher level of security for the longevity of your business. On top of that, it creates more space for growth and opportunities.
This will then be another step towards demonstrating the value of your business when it’s time to sell.
Replacing Maximises Your Business’ Value
Starting the replacing process sooner than later will not only help build its profitability, but it will also give you as the owner peace of mind that your hard work wasn’t for nothing and that it will go on without you for a long, long time.
However, as soon as you do start, you’ll notice your time freeing up, time which can either be spent growing the business or just time to finally breathe.
Consider your options for replacing and figure out what’s the most cost and time-effective solution.
The Cash Out Catalyst can advise you on the best course of action for your business and what you need to be doing to prepare your business for sale. We constantly are work with business owners who all share this problem and have successfully helped them get the pay-day they deserve
As you were reading, you may have thought of a business owner that would find it useful. Please share it with them – I’d really appreciate it.
Finally, I’d love to know which of the three ways that replacing can transform your business would make the biggest difference to you? Let me know below – I reply to every comment.
