Hands Free Business

In a meeting with a client recently we were exploring what he wanted his business to look like three years from now. I asked him if he thought his business was ready to sell, today?… His answer was interesting. He said that the business was going well but there was no way he could sell it as the new owner would not have access to most of the intellectual property of the business which currently resides inside his head. Upon exploring that issue it became apparent that there was no way he could step away from the business as the knowledge stored inside his head was critical to the business’s processes.

The Issue

I think this issue is a common pitfall for many small/medium businesses (SME). The founder/owner has much of the business’s intellectual property (IP) stored in their head which greatly devalues the business if they are taken out of it. My challenge to clients is to have their business ready to sell every day that they own it. That means that the business systems and processes have to be easily transferable to new owners. The business has to be able to run just as well without them as with them. It has to be “hands free”.

What Works

When you think about it, the reason good franchise businesses work is that the operational systems developed to run them are well defined and documented allowing them to be easily learnt by new entrants. That makes those businesses saleable and is the reason franchise businesses can often change hands relatively seamlessly. Hence, the justification for franchisors charging their franchisees fees… The challenge for ‘one off’ businesses is to replicate those circumstances so that they can also be sold or passed on and the changeover of ownership can occur painlessly.

Having a Strategy

Many SME business operators are so tied up in their business operations that they rarely take a step back to see what they have created and where that creation is headed. Having some sort of strategy to eventually harvest the value out of their creation is critical. Failure to do so relegates their exit from the business to good fortune and anyone who has been in small or medium business knows that good fortune takes a hell of a lot of hard work. An understanding of what you eventually want to get out of your business will guide your thinking on how to systemise the business and get it to be hands free.

Ask Yourself

The easiest way to think about what’s needed is to ask yourself:

• As an outsider, would I buy my business as it currently is?
• Would I be buying a business system or merely a job?
• Would the business operate hands free?

If the answer to any of those questions is probably not then you have work to do…

Find out how we can help you make your business hands free – call now

Further reading on this topic can be found here

Other Articles