If you ever try to sell your business, one of the first things a potential buyer will look at is your leadership team. Do you have real leaders working for you? Are they compensated the way real leaders would expect to be? Or does the entire company revolve around you? There is nothing wrong with being a one-man or one-woman show, but don't expect to sell your business for much if you are.
As Vic Haas, a business valuation expert in Philadelphia and President of Haas Business Valuation Services (www.haasvalue.com) says, "Business is all about minimizing risk and maximizing return. A buyer will pay more for a company and its income stream if the risk of losing that income in the future is reduced. A broad management team is one important way for a company to ensure future earnings and reduce risk for investors."
Potential buyers for your company are looking for a deep management team. As a result, hundreds of thousands if not millions of dollars may rest on your ability to be a leader rather than a loaner in your business. Here are some steps to take to do just that:
Start planning right now. As Tom Raynor, CEO of Fleet Feet Inc. says, "The best time to plan your exit from your business is when you start it." Great businesses are built by people who understand the value of creating a business that runs without them and who are working a long-term plan to realize that value. This is not intuitive to many entrepreneurs but if you embrace it now, you will make yourself a lot of money.
Get honest about your own strengths and weaknesses. Early in your business development, you probably wore every hat in the business. However, no one is good at everything. You should increasingly focus your efforts on the areas where you create the most value. Ask people you trust who have no financial stake in your organization for feedback on this question. Good feedback here from people you respect is extremely valuable.
Stop being a control freak, it is hurting your wallet. When you started your business, it was strength to be obsessive over every aspect of the business. Things got done right because you made sure they did. Now, your business has grown. If you don't adapt your approach and learn to let go, you will stunt your company's growth and hurt its long-term value. Without fail, entrepreneurs who build significant enterprises realize that they have to hire good people and entrust major pieces of the business to them.
Assess your current staff. Do you have people in your organization with the right stuff to buy the business from you one day? Are there individuals in your organization you can envision promoting to President one day? Do you have people who can run important segments of your business without significant involvement from you?
If your answer to these questions is no, you have to put a plan in place to bring in stronger talent. Your company is filled with B and C players who may do a good job of following orders but will never be able to run the company. If your answer to these questions is yes, you have two issues to address immediately. First, do you have a plan to provide them with more responsibility and commensurate compensation over time? Second, are you taking steps to make sure that you keep them with your organization vs. losing them to a competitor?
Network. As a business owner, one of your primary roles is being "recruiter-in-chief." In the end, we all want to find someone whom we know, like, and trust to run our business for us. To find that person, you need to place a premium on building your network of relationships inside and outside your industry. The people you meet today may be running your business for you or buying it from you five to ten years from now.