4 ways to reduce owner dependence
I know a lot of business owners who look forward to the day when they don’t have to show up at the office any more.
Yet how to exit your business may not feel like the most relevant thing to focus on right now. Maybe you aren’t ready to sell or don’t know if you even want to sell.
But I bet that one of the reasons you decided to build a business was more personal freedom.
It’s hard to be free when the business that was meant to increase your independence and flexibility has you chained to an office, desk, production floor or job site.
Those chains are known as owner dependence - your business depends on you to perform core functions, make and deliver on sales, solve problems, make key decision, or do the job of 2 or more people.
If your business depends on you in this way, it may be out of necessity. Or perhaps it’s by design.
Building a successful business is gratifying. So it solving big problems, landing new business, developing new products and being in control. That’s why it’s so easy to get chained up and stay that way.
Which means, one of the biggest hurdles that stands between you and the freedom you’ve always wanted your business to provide is: YOU.
Aside from being a huge red flag to a potential buyer, owner dependence is the thing that will keep you tethered to your business long after you want to get out of the day-to-day (which is probably years before you wan to exit.)
By making yourself indispensable, you’re taking on more than one person should and creating bottlenecks that starve the business of the oxygen it needs to grow.
It’s also likely that you’re overstating profit because you’re not hiring and training a professional management team to execute your vision.
I know, no one cares about your business as much as you do. And no one you’ve tried bringing in as a “number two” has come close to being as good as you at key functions like sales.
But if you
Don’t take vacation or have to do work while away
Don’t have someone on your team you trust to make decisions without your input or approval
Are the person everyone calls when there’s a problem
Can’t imagine sharing your financials with anyone but your CPA
Are the only person at the company that some clients will do business with
Are 100% dependent on your business for your family’s financial wellbeing
Personally make regular capital contributions so your business can meet its obligations
Then you’re on a path to nowhere.
Creating business transferability - being prepared to fire yourself - starts with identifying all the ways your business depends on you to function and how you encourage that dependence to your own detriment.
At the heart of each functional role that keeps you tied to your business is a failure to delegate. Failure to delegate is often tied to a lack of trust in others, a lack of process for others to follow, a fear of having your decisions questioned, a desire to avoid feeling vulnerable or exposed, and trepidation about what it means for your business to truly exist without you.
So where do you start?
Shift your mindset
Care more about what’s best for the company (employees, customers, vendors) than being right or in control
Redefine your role by removing line-worker and management responsibilities and focusing on coaching and mentoring others, communicating your vision and setting strategy
Define your self and self worth separate from your role as owner
Believe in your ability to find and cultivate talented people who share your vision and want to lead
Set clear competency and performance expectations so leaders can earn your trust
Lean into your values by giving them greater clarity and showing employees how to use them to lead from where they are
Intentionally come to see yourself as owner/investor rather than owner operator and act accordingly
Build a Team
Create a management team with defined functional responsibilities
Determine what ongoing training and coaching employees need to succeed when promoted from within or hired from the outside
Delegate tasks and authority - allow others to make decisions and be accountable to you for the results
Introduce other leaders to the clients, vendors, and peers who prefer to work with you directly and explicitly transfer responsibility for knowing and working together to both of them
Define what success looks like, provide people with the resources needed to achieve the desired results and create a feedback loop that fosters a culture of accountability
Make things replicable
Have someone interview you about how and why you do what you do as the first step in documenting your responsibilities
Require your team to create step-by-step process documentation for their activities
Create standard operating procedures that don’t currently exist
Take yourself out of the process chain and insert new management team leaders
Require all employees to follow documented processes
Creating onboarding and ongoing training programs for processes and procedures
Invest in technology and automation to improve efficiency and to create transparent KPI reporting
Identify and actively grow new leaders through intentional mentoring and coaching
Clean up financial and other records so you feel comfortable sharing them with others
Step out of the spotlight
Let others be the face of the company with external stakeholders
Elevate the public profile of your leaders through marketing and public relations
Create a management team with and through whom you discuss and resolve issues, make decisions and communicate vision, strategy and tactics to staff
Build new networks to support recruitment and to help you prepare for your ‘what’s next’
Purpose First Advisors specializes in helping business owners make succession and exit planning present-tense. Let us help you build, grow and exit your business on purpose, with purpose.
