'A business that can solve its own problems with standard application of policy is far more valuable than one that needs the leader to put out all of the fires.'
Job or Business?
Eight Ways to Know Which One You Have
How do you know whether you have a job or if you actually own a business? The answer will have a tremendous impact on your short- and long-term success. Whether you are considering selling your business next year or 10 years from now, you want to be building an asset someone will buy. If you cannot find a buyer who will offer a good price for your business, then you quite possibly have a job, not a business. In this article, we will explore eight ways to test your relationship to your business and how to build long-term value.
Are you required to show up at the office?
A job requires that you show up at the office or in the field to make money. Does your business need you there day in and day out? Does the business suffer when you are away? A business generates revenue and profit whether the owner is there or not. In fact, some of the strongest businesses do better when the owner is away as the team pulls together and handles issues that arise. This kind of business also has far more value to a buyer.
How reliant is your business on a single customer?
Does one customer carry enough weight to dictate how you work with it? Does this customer account for 15 percent or more of your total revenue? Does the decision-maker call you directly when there are issues or when he (or she) needs something? Too many dealership owners handle the business’ largest accounts. This requires them to be very involved at all times. This is more like a job than a business.
A strong business is not reliant on one or two customers. If your business is too reliant on one or two customers, it will have a significant impact on the value of the business. Buyers are very nervous about buying an organization like this.
How much does your personal reputation impact business results?
A job is a place where your personal reputation impacts and often dictates your results. Do your customers refer to your company by name or to you instead? If someone asked them who supplies their systems, would they say “ABC Company” or “John Smith”? Do you find yourself
referring to customers as “my customers” or “our customers”? In a business, the brand is senior to the personality leading it. Having a strong brand builds value; a brand itself will often attract buyers.
Do you personally put out many fires in the business?
A job requires your personal experience and expertise to get a result. The problems come to you and you provide the solution. Do your employees tend to bring problems to you? In a business, desirable results are produced consistently by processes, not individual experience and intellect. Of course, the people have to be there to carry out the processes, but with strong policies and procedures in place, you do not have to solve all of the problems. Let’s face it, there will always be fires. A business that can solve its own problems with standard application of policy is far more valuable than one that needs the leader to put out all of the fires.
Can you take as much time off as you want?
In a job, you get fired for taking too much time off. Do you avoid taking long vacations? Do you constantly check email while you are out? Do you call the office more than once a day when you are out? The more time you can take off without negatively impacting your company’s performance, the more valuable your business will be.
Are you working harder than you want to?
In a job, the harder you work, the more money you make. Are you the first one in the office and the last to leave? Do you find yourself outworking your team members? Do you take work home at night and on weekends? I have seen many dealership owners work themselves to exhaustion, not realizing they were holding their businesses back. In a business, working smarter and using the resources available to you make for a more valuable entity and, by the way, a happier owner.
Do you closely monitor and drive the financial results of the company?
Employees rarely know the financial position of the company. In fact, most operate as if the company is a bottomless barrel of money. How often do they direct their actions toward building profit? Most do not know how to drive profitability. If left to their own devices, many employees would drain the company dry, look back and wonder what happened. A business owner understands and closely monitors the financials. He uses the income statement and balance sheet as a road map to success. Doing this creates an exponential increase in the value of the business.
Do you have a succession plan?
An employee with a job rarely worries about what will happen if he resigns. He does little or no planning to ensure someone else can take over his role. As a business owner, you cannot afford that luxury. Do you have people who are trained and qualified to run the business in your absence? A strong business has succession plans outlined and plans in place to work toward them. People are being trained to take more responsibility in the future. The lack of a succession plan limits the options available at the time of your exit and reduces the value of the business.
Running a business is not easy. If it was easy, everyone would be doing it and would be successful. Looking closely at these questions will provide some insight into areas that might be holding you back. As a business owner, your job is to ensure the short- and long-term success of the business. When you approach it this way, you no longer just have a job — you have a business. A business is far more valuable than a job while you are running it and ready to sell it. The best part is that you do not have to tackle all of these areas at once. Hit them one at a time and watch the results.