If You're the Business, You Don't Own an Asset

Hello, and welcome to this month's edition of Building Value. If your business can't run without you, you don't own a business. You don't have an asset. You just have a really hard job. One where people expect you to solve really difficult problems every single day.

Now, that may sound harsh, but it's one of the most common challenges we see amongst business owners. Many founders believe they have to be the business because for a long time they were. They were the reason that clients came and stayed. They were the reasons that employees knew what to do. They were the reason that everything got done.

Now, unfortunately, a byproduct of that thinking is that due to all of the above, they assume that nobody would ever buy the business, so they don't build with that in mind. And after all, if they leave, everything would fall apart, right? So, why would they work to change this? Why work to prepare for an alternative that feels like a fantasy? But, that's exactly the problem. The more business depends on one person, the less valuable it becomes.

Think about it from a buyer's perspective. Would you pay a premium for a company where every important decision requires the founder, processes aren't documented, the team can't operate without constant supervision and being told what to do? Probably not. Cuz what you'd really be buying was a job, not a business with real enterprise value.

Now, whether you plan to sell your business someday or not, there's something else incredibly important to remember. Every business owner exits eventually. Some by choice, others by circumstance. So, the question isn't whether you'll exit. The question is whether you built a business that can thrive without you when that day inevitably comes.

And here's another interesting byproduct that typically gets left out of these conversations. When you build a business that's less dependent on you, you don't only or just increase enterprise value. You also usually improve your quality of life, too. You can take a vacation, spend more time with family, step away for a few days without checking your phone or your email every 15 minutes. And equally as important, it allows you to spend less time working in the business, freeing you up for deeper work on the business, generating creative solutions to difficult problems, the sort of work that usually excited us to start business in the first place.

So, where do you start? You start by getting the business, the institutional knowledge out of your head and out of your hands. Delegate relationships, delegate decisions, document processes, create systems that other people can follow. Because the goal isn't to make yourself more important to the business. The goal is to make the business less dependent on you.

Remember, building value isn't just about growing revenue or increasing profits. It's about creating a business that's bigger than any one person, including you. And when you do that, you don't just create a more valuable company, you create a better business. Thanks for joining me everyone. Until next month, keep building value.