Small Business Tip of the Week: Can your company run without you?
Dec. 7, 2010 at 6:07 a.m.
Imagine you never return to your business. You are gone - for whatever reason - and you never return.
Have you created something of value in your business that will survive when you walk out the door that final time?
It is estimated that only one in 100 small businesses are ready to sell. You might argue you don't want to sell your business. That is fine. But would you or your business benefit from building a product or process that is teachable and transferable, and attractive to a strategic business partner?
This could take much time and effort, but building a sellable business - something larger than yourself - creates wealth potential that could offer a more comfortable retirement, a launch pad for another successful business, financial freedom or, at a minimum, the possibility of a better night's sleep.
The following list of questions could help you to determine whether your company could get along without you.
1. Have you diversified your customer base so you are not dependent on any one customer for more than 15 percent of your revenues?
2. Do you have a sales team that can clearly and succinctly describe and pitch the value your firm offers to your customers?
3. Can your sales team identify and predict your sales conversion rate in order to estimate your market potential?
4. Have you built a loyalty-based, long-term incentive program for your top management team that does not involve an equity-based program?
5. Do you know your firm's "sweet spot" and have you defined and refined this distinctive competency?
6. Have you branded your firm's product so that you have ownership of something that differentiates you from your competition?
7. Have you identified and documented the process and procedures your firm uses to produce your unique product?
8. Do you have a consistent process for delivery that also produces recurring revenue?
9. Do you have a product that can be reproduced by your team over and over again for a large customer base?
10. Have you created a positive cash flow cycle?
11. Is your company independent of you, the founder?
12. Do you have a vision of growth that catapults you beyond your present cash and resource limitations?
13. Are you capable of suspending reality and really thinking BIG?
A "yes" to the questions above will propel your company to one that gives you, the business owner, many more options. Resources are available that can help a company plan strategically and give owners more than the single option of working forever in their business.
At the University of Houston-Victoria Small Business Development Center, we can help with planning a sellable business.
Eileen Bonner is a senior rural business advisor at the University of Houston-Victoria Small Business Development Center.