Do you have a vision for your business but are unsure of the path to reach your goal? Most business owners feel that there are constantly obstacles that get in the way. Have you considered how you would overcome the feeling of being blindsided by the unexpected?
Are you working “on” the business or “in” the business?
Regardless of where you are in your business, there is a distinct difference between working on the business versus working in the business. What business owners sometimes fail to realize is that strategic planning and execution is critical to sustainable success.
Understanding your own vision and being able to communicate that to your executive team and staff is paramount for business growth and sustainability. As you look at the future of your business, ask yourself these questions to gain perspective: What is the value? For example:
- Does your vision align with your leadership team and inactive and active family member employees?
- Do you have the excess capital and resources that growth requires to support next generation leaders and owners?
- Do you have leadership bench strength and are you and your successor(s) confident in their ability to lead the business?
- Are there any relationship conflicts that could impact business operations today or in the future?
- Are you financially independent from the business? Will all business credit guarantee and working capital loans be reconciled prior to your transition out of management?
Considerations for working “on” the business
It is critical that the value of your business be generated by the organization overall and not depend on the performance of just one or two employees. A proper valuation of the worth of your business will examine and extrapolate from the present cash flow and earnings generated by it, as well as the volatility of those cash flows and earnings.
Succession planning establishes plans to protect your business’s ability to generate those future cash flows, and therefore it is an essential element to protecting the value of your business.
The success of your business is dependent not only on future profits, but your ability to adapt to changes in the market, customer needs, technological change, and generational and cultural interests. A common practice for business owners is to extract dollars from the business to sustain a lifestyle. This is not a sustainable business model to foster growth.
It is important to look at strategic planning to ensure you have all the appropriate resources in place to sustain success with or without key employees. Being prepared and building a foundation of success today will provide the opportunity for growth and continued success for future generations.
If you are interested in an evaluation of where your business stands today versus where you want to see it go, we work with Business Succession Planners that have the experience to guide you and your management team. For more information please give us a call. Do not let the unexpected impact your life’s work.