Balance sheets list cash, receivables, inventory and equipment. They do not list the assets that matter most in a closely held business: the owner’s health, time and relationships.
Health is a business asset
In a closely held company, the owner is usually the key person: the relationships with lenders, customers and growers, the knowledge of how things really work, the final say on big decisions. If the owner’s health fails, the business feels it immediately.
So staying healthy and capable is not only personal. It is risk management. Alongside it, every owner should have the basics in place: key-person coverage where it makes sense, a written list of who can sign and decide when the owner is unavailable, and records good enough that someone else could step in.
Time is the one asset that cannot be bought back
There will always be another chore. There will not always be another healthy year.
Owners routinely spend evenings and weekends on work that someone else could do well: coding transactions, chasing invoices, reconciling accounts, rebuilding the same spreadsheet every month. A useful exercise is to add up the hours spent each month on that kind of work and ask what those hours are worth, both in money and in time that will not come back. Very often the answer makes delegating an easy decision.
Relationships carry a business through a transition
Sales, refinancings and handoffs to the next generation go better when the owner’s relationships are strong: with family, with key employees, with the banker and with long-time customers. Those relationships take time to build and maintain, and they are often the first thing squeezed when the business takes every hour.
Putting it into practice
- Protect a few fixed hours each week for health and family, the same way a board meeting is protected.
- Move routine accounting and reporting off the owner’s desk, so the owner’s time goes to decisions only the owner can make.
- Write down what someone would need to know to run the business for a month without the owner, and fill in the gaps.
Next in the series: You Don’t Have to Earn a Day Off.
The Next Phase: a five-part series
- 1. Your Business Should Work for You
- 2. Trust the Plan
- 3. Protect the Real Assets (you are here)
- 4. You Don’t Have to Earn a Day Off
- 5. Practice the Next Phase Now
Planning your next phase?
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