Many successful business owners try to answer the question ‘how do I get my company to the next level?’ Many owners exhaust themselves and their resources each year, pushing their businesses to perform at higher and higher levels. However, there are a number of ‘truisms’ about small business that, once understood and accepted can make the growth (and transition) process more effective. The five (5) truisms listed below are symptoms that face each small business that is trying to grow and transition, at some future point in time, to a new owner. This newsletter is written for those owners who are trying to grow so that they can reap certain benefits that may come when it is time for an exit.
Truism #1: Nothing happens in a privately-held business until the owner(s) decide it will happen
Privately-held businesses that are run by the founder / owner are driven by that owner’s goals and ambitions. And, what you slice away all of the strategy and other decision-making in a business, the reality is that nothing truly happens until the owner decides that it will. A privately-held business will not grow until an owner decides that it will happen. The same business will not begin a transition or exit plan until the owner feels that it is needed.
As we’ll see in the next few truisms, many owners are not motivated to grow a business, increase the value, or prepare for a transition because other motives are driving their decisions. Therefore, understanding our first truism about an owner needed to ‘authorize’ any action set an important foundation.
Truism #2: Most businesses are run for the lifestyle of the owner
Of the many challenges that face growing the value of a business, the largest one is the owner’s motivation to act. And, in this regard, it is helpful to point out that most businesses are run for that owner’s lifestyle. Therefore, if an owner is happy with their lifestyle today, they may be hard-pressed to take risks to grow the business which may impede on their lifestyle.
While there are many risks in owning a privately-held business, the reality is that the risks are worth it to most owners because the business provides the owner’s lifestyle. To that owner, the alternative of going back to work for someone else is so offensive that it is hardly an option at all. Therefore, to this owner, taking risks that possibly compromise their lifestyle is often not worth moving forward with – even if all of the logic in the world points to reasons why a business should grow and increase its value. In short, growth means extra work and risk and those are often two (2) words that do not resonate with what an owner values most.