Every owner eventually reaches the point where the next phase begins to come into view: a sale, a handoff to the next generation, a step back to a board role, or simply working less. How well that transition goes usually depends on one idea that is easy to say and hard to practice: the business needs to work for the owner, not the other way around.
This five-part series looks at the principles that help owners prepare for what comes next, and the practical financial steps behind each one.
A bridge, not a destination
For most owners, the business is the biggest asset they will ever have. It is also easy to confuse it with the whole of life. The business pays for the house, the kids’ education and the retirement accounts, so it gets the first claim on every hour and every worry.
A better way to see it: the business is a bridge. It carries the owner, the family and the employees from where they are to where they want to be. A bridge needs to be well built and well maintained. It does not need to be lived on.
Do good work. Protect the income. Protect the reputation.
Those three things are the job of the bridge. In financial terms they look like this:
- Good work: customers who come back, margins that hold, and a product or service the owner is proud of.
- Protected income: a fair owner’s salary paid on schedule, retirement contributions made every period, and a cash cushion so one bad season does not undo years of progress.
- Protected reputation: honest books, taxes filed on time, and lenders and suppliers who trust the company. A reputation takes decades to build and is the first thing a buyer or lender checks.
Do not give the business more energy than it deserves
This is the hard one, because there is always more to do. A simple test helps: does this task protect the income, the reputation or the quality of the work? If not, it can wait, be delegated or be dropped.
It also has a financial payoff. A business that depends on the owner for every decision is worth less to a buyer, harder to finance and harder to hand to the next generation. Getting the owner out of the daily details, with a reliable monthly close, clear reporting and people who can make decisions, is one of the best things an owner can do for the value of the company.
The life does not exist to support the work
The business should support the life the owner is building, not consume it. When an owner cannot take a week off, cannot miss a meeting and cannot imagine the business running without them, that is usually the first thing worth fixing. Not because rest is a luxury, but because a business that only runs with the owner at full speed is not finished being built.
Next in the series: Trust the Plan, on how to stop reopening the same financial worry.
The Next Phase: a five-part series
- 1. Your Business Should Work for You (you are here)
- 2. Trust the Plan
- 3. Protect the Real Assets
- 4. You Don’t Have to Earn a Day Off
- 5. Practice the Next Phase Now
Planning your next phase?
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