Lori Grenier from Shark Tank famously noted that “Entrepreneurs are willing to work 80 hours a week to avoid working 40 hours a week.”
I know this to be true from personal experience and from working with a lot of business owners. I recently met with a company, brought in by their investment banker. They have a far greater valuation in mind than is real, because they rely on a stud sales CEO to make all the big plays. They have no real sales process other than this guy, and he is far too concentrated on a specific type of customer.
So really, it’s an unsellable biz — at least not for a decent multiple.
The desire to “be our own boss” leads many of us to give it our all in order to make our businesses successful — even if that means working an insane amount of hours and doing it all ourselves.
Working hard is laudable–its part of the American Dream. But what would happen to your business if you were unable to personally work hard at it? Could it keep going without you?
If not–then you really don’t own a business–you own a job. And really, this job owns YOU, because you can never exit without everything collapsing!
Let’s talk about what you can do to transition from being an employee in your business to being an owner/investor — a much more powerful position to be in.
Stop the non-value-add tasks
Many business owners spend too much time on non-value-added tasks related to their business. You should identify tasks that can be either reassigned to someone else in the company or outsourced, so that you can focus on growing your business instead of running it.
Design and own the machine–let other people operate.
That means two things: a) finding the right people and b) establishing formal processes.
a. Find the right people (and treat them right)
One of the biggest excuses I hear for not growing a business is “I just can’t find good people.” This translates into never delegating and a mindset of, “if I want something done right, I have to do it myself.”
The solution is to never stop recruiting, interviewing, and hiring. And once they are onboard, these folks must be trained and motivated to succeed. You will be shocked at how many people are willing to work for passionate and inspiring leaders for fair wages–not outlandish salaries. Some will even take a pay cut for the opportunity to grow with you, meaning stock options, profit sharing and other wealth-building mechanisms.
When Volohaus works with a company, we take a lot of this work off the shoulders of our customers. This includes deep interviewing and assessing the current sales and marketing team and using tools like Predictive Index to set an “ideal hire” profile – per role. Then we onboard and train until they succeed.
b. Put proven strategies, systems, processes, and checklists in place so that the business can run without you.
If your sales processes aren’t formally worked out and written so they can be followed, you will be stuck wearing many hats that you could easily turn over otherwise.
The same goes for every other function of your company. A group of written systems sets standards and works as a job description, training manual, and creates the ability to SCALE — even after you hand over the reins.
We do a lot of research and data collecting through client surveys and competitive secret shopping, analysis, and TAM work. Combined with a bad-ass sales and marketing tech stack, which includes CRM, automated marketing, etc., this creates a scalable revenue system that adds tremendous enterprise value (a higher valuation multiple) and can help lessen the “earn out” and improve the “cash up front” at an exit.
Business owners should earn a return on investment, not paychecks. If you are too busy running the day-to-day minutiae of your business instead of growing it, you will never get there. The key is to work out your PLAN, PEOPLE, PROCESS and PLATFORM so that anyone can come in and say, “so THAT’s how this business makes money!” Investment bankers and Private Equity firms place a lot of value on this work.
And you will double or triple your valuation (or more).
Did I inspire you to make some changes? Let’s chat.
firstname.lastname@example.org or call my cell 760.815.4464.