If you’re a frequent reader on business improvement, you’ll undoubtedly read something that encourages you to focus. Focus on one niche. Stop multi-tasking and focus. Worry about the numbers – they should be your focus. Focus on the customer or on your employees, or on <insert list of more focus items here>.
OK, so what should I focus on?
Focus alone isn’t enough. You can’t really give the proper amount of dedicated attention to 37 different things. You’re going to have to figure out what YOUR list is and either delegate, skip or outsource the rest. Otherwise, nothing will get the attention it deserves and all aspects of your business are likely to suffer.
In the early days, this is toughest because it might just be you and no one else. So what drives your decision to let something slide a little, be it a day, a week or “forever”?
The long term.
It depends on your long term goals, but most of the small business owners I talk with tend to be 50+. As a result, they are seeing retirement a decade or two out. In most cases, they’re at cruising altitude with their business and have left behind the years of struggle and work to keep it open, then make it profitable and so on. They’re focused on maximizing the value of the business in the time that remains before they decide to sell.
The best have focused on building that company from the outset. “What do I focus on when it’s just me?” was answered for them years ago. Notwithstanding the random short term challenges that we all face now and then, their answer is “What can I do that is most important for my clients while growing the value of my company over the long term?”
The upside is that for a small business, it focuses you on the things that should get and keep your attention even if your plans to sell are 30 to 40 years away.
So your eyes are riveted on the buyout?
Yes, even if it’s decades away.
Building for a buyout is much different for a small company than for one on Wall Street. A privately-held company can focus on becoming more attractive to a buyer via predictable, consistent positive cash flow and profitability – with no stock price to lose sleep over. These things come over the long term through obvious accomplishments that most small businesses strive for: solid products and services, repeat business, great customer care, etc.
Obvious, right? The things that make a company profitable to the owner will eventually be the things that make it attractive to purchase. Part of that attraction is eliminating as much risk as possible from the buyer’s purchase. I don’t mean guaranteeing revenue or profits. I mean by selling a company that is inherently low risk due to the way it operates.
For example, you can reduce risk and build value by building quality, value-packed products, services and systems that produce dependable recurring revenue. You can reduce risk and build value by providing great customer care. Those loyal customers produce recurring sales and provide referrals that lead to new clients. You’ve reduced risk by structuring your company to survive the day you get hit by a bus. The same strategies will protect the company if you decide on short notice to fish Alaska for six months.
Do you feel your business is ready to sell?
When you sell a house, there’s that list of projects you have to get done in order to make it easier to sell. Once you finish the projects that seem essential to selling your home, seller’s remorse sets in a little bit. You wish you had made those improvements years before so that you could have enjoyed them. You enjoy the home a little more in your final days there – in part because of the changes you put off for months or years for whatever reason.
A business often has the same list. They make the business some combination of less risky, easier to run, more profitable, and/or less hassle. Over time, the value of these projects pay for themselves and make the company more attractive to the right buyer.
Making the company more attractive to the right buyer takes a long term view. You and your team will benefit in the meantime.