4 Strategies for Building a Valuable and Self-Fulfilling Business
Before you started your business, you hopefully imagined how your life would look and feel as a business owner. You imagined getting up each morning and going to work on your baby. You imagined hiring people, finding and earning customers, delivering the products and services, and generally enjoying the freedom and control of ownership. The reality of owning a business is likely altogether different than the way you imagined it. You are pulled in multiple directions each day, and your most well-thought plans for the day easily go awry. Eventually, the business owns you, rather than your owning the business. You’re stressed out, tired and unproductive. But you love the work, the business, and you’re not going to give up.
So how do you push the reset button here? Here are 4 strategies you must adopt and implement in order to right the ship.
- 3 months of expenses in the bank. This is your business emergency fund. The peace of mind that comes with this is invaluable. It frees-up the brain energy that otherwise is lost in worrying about where the next payroll is coming from. It also allows you to take some risks – maybe introduce a new service line, or implement some game-changing process improvements. You can more easily sacrifice short-term sales to accomplish such changes when you have 3 months of expenses in the bank to keep you going. Replenish this ASAP upon use. Additionally, we generally recommend you do not keep more than 3 months of expenses in the bank to mitigate the risk of that cash being vulnerable in the event of a lawsuit.
- Plan for taxes. Meet at least quarterly with your CPA and be sure you understand your tax liability. Make estimated payments if needed to avoid a huge tax bill at filing time. This is another peace-of-mind strategy. Do not attempt to make your own tax plan. It is essential you engage a CPA who has deep expertise and can make sure you are paying the lowest amount of tax allowed by law.
- Replace yourself. This is how you build a company that is valuable. Your company needs to be able to run without your needing to be present. It needs to be completely self-sufficient. Such companies sell for many multiples higher than businesses that are solely dependent on the owner’s participation day-to-day. If you own the business and you do most of the work, you do not own a business. You own a job. Businesses are more valuable than jobs. Hire the right people and put processes in place to allow the business to run without you. This is a tall order, and is not accomplished overnight. It’s a great idea to seek a business coach to help you set the course and get you to the promised land.
- Hire at least 1 more than you need. People come and go. And when they go, someone has to do that work. It usually falls on those who remain, while you scramble to hire someone. This is a good way to over-work your existing employees, which can lead to burn-out and losses in productivity. Hire one more than you need, and spread the work out in such a way that there is some unused capacity for each employee. That way, when someone leaves – and someone will leave — remaining employees can easily pickup the slack until someone is hired. Furthermore, and perhaps most importantly, you can more easily bring on additional new business when your employees have capacity to take it on. It’s a constant negotiation between keeping employees as productive as possible and avoiding burn-out. As employees approach 80%-100% utilization, hire someone to make sure you always have at least 1 more than you absolutely need.
These are each rather big ideas. They each will require intentional planning, goal-setting and accountability. Engage with professionals who are experts and can help. At the end of all this is a more balanced life for you, happy and fulfilled employees, and a business that will provide significant value to the owner when the time comes to sell.