Do you feel like you’re never able to take time off from your business, without the place falling apart?
You’re not alone.
The last couple of years have been really tough for business owners. Not only have we seen rapid changes in the economy – we’ve also seen huge disruptions to the way we live our daily lives.
These circumstances are causing high levels of stress for everyone, with SME business owners feeling the brunt of it.
According to the 2020/21 SME Research Report from Bstar, the success of most SMEs is strongly linked to their owner(s). The report showed only 17% of SMEs had low/no reliance on owners.
That’s a huge burden to carry!
But here’s the good news. If you can build a scalable business that is not completely dependent on yourself – your business, and your lifestyle, will be better off.
Here are some reasons why you should look to reduce owner reliance in your business.
A sustainable business is a successful business
All business owners need a break every now and then. Pushing yourself too hard is not sustainable, long term.
Sometimes you will need to take a break voluntarily – like a nice holiday with the family or a big fishing trip with your mates.
But the reality is, it could also be forced upon you – by way of an accident or illness.
What will happen to your business then? Is it equipped to stand on its own two feet, with you out of the game for say, three weeks, three months or longer?
You need to be able to step away from time to time, and know that the business won’t fall apart.
Time to “work on” your business
Owner reliance goes beyond just day to day workings in the business. Owners need to be able to have the time to “work on” their business not just “work in” it so that they can guide the future of their business with
- strategic thinking
- business planning; and
- innovative problem solving.
Strategic planning for your business is critical but can be overwhelming, especially if your daily operations are demanding.
This is an area where you can engage outside help. It will not just to take some tasks off your plate – it’s a great asset.
If you engage a professional to help with this, you can rest easier knowing an expert is helping you develop and implement your strategy.
At DFK Everalls, we specialise in assisting businesses on this path. We know all the important things that need to be taken into account – and we can help you make well thought out and informed decisions.
Having the time to make sure your business is staying on the right track protects the business and also protects all your stakeholders including your family, the team, customers and suppliers.
This in turn increases the value of your business.
A happy business is a successful business
When you delegate some responsibilities and tasks, it gives your team security and growth opportunities.
This in turn promotes a positive work environment, where team members support each other’s goals and work towards continued improvement.
If your team feels trusted and capable, they are more likely to remain loyal – and more likely to be happy at work.
If you implement systems and procedures so your team can manage without you, this can contribute to a more consistent and therefore better quality client experience because if clients get a consistent service/product every time, regardless of the employee, they are more likely to come back.
And we all know – a contented, organised work environment means less team turnover, which improves customer loyalty and increases the value of your business.
Your Business Succession Plan
While we don’t like to think about this – the reality is, you need to protect the value of your business for the benefit of your estate as well as your team, clients and other stakeholders.
You have probably been working hard and long hours for years, something you and your family have tolerated because you are “building the business”. But if you were to get hit by the proverbial bus and your business is completely reliant on you then the business will die with you, leaving your family and estate with nothing.
A business that is less reliant on you will have specific systems and processes. These will enable the team to hold the fort for a few weeks or months until a new owner or manager can be found. This enables the value of the business to be protected for the benefit of your estate.
If you have a business partner, what would happen if they were to pass away suddenly? Would you end up with their spouse as your new business partner? Or, would the Estate be hassling for you to buy them out immediately?
How would the profitability and therefore value of the business be affected without your partner? And how would that impact on your ability and desire to pay them out? Would there be an argument about what their share of the business is worth?
How would you even come up with the cash to pay them out?
Business owners need to understand how the loss of a key person will affect the value and the profitability of the business.
You need to be confident that the business will survive from a cash flow, productivity and therefore profitability point of view.
If you have already built your business in a way that means it won’t completely fall apart if a key person were to leave – you are already securing its future.
Get in Touch to Reduce Owner Reliance
If you want to discuss more details about Business Succession Planning and Buy Sell Agreements and what you need to have in place – give us a call.
We can walk you through the process.
We also provide other business advisory services, including Business Risk Analysis and Mitigation. So, if you’re looking to find ways to grow your business while reducing owner reliance and therefore improve the value of your business just give us a call.
