Should You Stay or Should You Go?
Congratulations, your business has survived the recession! Thanks to your leadership, you held off the banks, reduced your debt, collected your receivables and delivered great products and service.
Today, your firm runs lean, with loyal customers and reasonable profits. So what should you do next? Are you satisfied, dissatisfied or neither? Should you grow your business or should you sell it?
Asking your advisors doesn’t make your choice any clearer. They declare your business is worth less now than before the recession, but not as much as it could be in five years. But to recharge your business you’ll have to refocus your efforts and reinvest some of your wealth back into your firm. Can you? Should you? How do you decide whether to grow or sell your business?
After working with hundreds and speaking with thousands of business owners, I am convinced the decision to grow or exit your firm means reconciling and aligning your personal and business goals. Here’s how:
- Decide on Your Personal Goals
- Needs: What type of income, validation and purpose do you need?
- Lifestyle: Do you live to work or work to live?
- Legacy: Has your business accomplished what you personally set out to do?
- Pinpoint Your Business Goals
- Life cycle: Is your business at its peak or trough?
- Best and Highest Use: Has your business fully exploited or squandered its value.
- Potential: Can you or someone else take your business to the next level?
After you’ve developed an objective list, you may not be any closer to the root issue. Just like a defining point drove you to start, buy or revive your business, you may need a defining point to help you decide if you will grow or sell your business.
Clarifying your defining point
Remember Popeye the Sailor Man (and original Zen master) standing up to Bluto, spluttering, “That’s all I can takes, ‘cause I can’t takes no more”? That’s what a defining point feels like.
As a business owner, you’re probably highly self-motivated, but do you know what got you started or keeps you going? Was it a flash realization or a series of events? What led to your decision to grow your own business, overcome obstacles, and ultimately succeed? Answer these questions to narrow down your defining point:
- When did it occur?
- How did you know what it was?
- Since it occurred, what do you now know and do?
- Since it occurred, what do you no longer believe or do?
- How does your defining point give you confidence?
Identifying this source of conviction is the first step toward growing your business, because it will power your commitment to implement the knowledge, behaviors, and tools of successful owners. Clarifying your defining point will also help to reconcile your business, family, health, and other life challenges in a way that works for you. How can it accomplish so much?
Passion can be mistaken for blind faith, and blind faith has killed many businesses. (Okay, it’s built some really good ones, too, but let’s go with the odds.) The point is this: You need to know your limits. Astute owners balance knowing they can implement, sell, and deliver new ideas with the pragmatic necessity to make money. Avoid any new venture before taking a hard look at what you can sacrifice in terms of cash, time, people, and other resources. Otherwise, your conviction is really just wishful thinking.
Looks like you’ve made it
For years, I’ve seen venture capitalists and other financial gamers flail about in the ocean of ownership. I’m convinced that few of these financial intermediaries make great owners. They generally lack passion about what they sell. They talk about things like roll ups, cash outs, and other financial gimmicks, but don’t focus on delighting their customers, living their products and services, and standing behind everything they sell. Likewise, corporate players who try to cut and paste corporate tactics into a new business don’t experience the freedom or the success involved with building a company brick-by-brick on the strength of an owner’s distinctiveness.
Whatever their background, winners discard the trappings, the ego, and the support mechanisms and get, what owning a business is all about—delivering customer value.
Are these guys lucky? Do they possess a Midas touch that turns decisions into profits? Absolutely not. Their magic is the self-confidence that stems from believing in their companies. Their triumphs are the living, breathing examples of their core conviction that as business owners, they each control their own destiny through the passion and conviction they either do or don’t possess.
You can’t file conviction in a drawer and move on to the next challenge because, as your firm grows, the issues, concerns, and crucial decisions you face will evolve. The conviction of a rookie entrepreneur looks nothing like the conviction of an owner of a multi-million dollar company. Yet, however big a firm becomes, it never outgrows its foundation. An owner’s commitment, confidence, and conviction remain the crucial drivers of a company’s success.
Ambivalence is to the business owner what salty food is to an obese smoker with undiagnosed high blood pressure—a silent killer. Check the following symptoms to find out whether you are ambivalent. Do you agree with any of the following statements?
- My products or services aren’t all that effective.
- My customers don’t really deserve the best.
- My employees are replaceable.
- Sure, I can cut corners. Who’ll notice?
- What, me lead? My people know what to do. Leadership doesn’t really matter.
A “yes” answer to one or more of these statements indicates some level of ambivalence.
Whether our businesses are in transition, succession, growing organically or through acquisition, we owners all share a common standing. Once we’re recognized as business owners, we never want to go back to work for someone else. In our independence, we all belong to the one club that even Groucho Marx would want to stay in.
The freedom, affirmation and respect we encounter is difficult to replicate in the corporate world. And even if it does, it usually comes with strings attached. So it’s not surprising that the drive to protect what we’ve created could be the professional equivalent of a mother’s devotion to her child’s well being.
On the one hand, we fear the downside of failure, on the other, we yearn for all the opportunities we could be missing. How can we protect what we’ve earned, invest in new opportunities and avoid the clear threats our businesses face? These dilemmas torment many owners. How many times have you seen examples like these?
- A successful security alarm company ignores the clear trend toward smart homes and integrated home-theatre systems only to discover that these providers are now competitors as they include security alarms as part of their command and control systems.
- A maturing accountancy, searching for new services with better margins, starts offering executive search and outplacement. Instead of embracing these added services, their clients grow confused and wary, when even the partners struggle to explain why and how these different offerings work together.
- A computer cabling company moves seamlessly from connecting servers to setting up wireless connectivity. Their customers are grateful and even more loyal to their cabling company for shepherding them from obsolescence to state of the art.
In the final analysis, your role as a successful business owner may come down to two conceptual duties: demanding more predictability of your existing business and honing your skill in scouting out your environment.
You know you demand greater predictability from your existing business when you:
- Aren’t happy with great results until you know how they happened
- Become intolerant of erratic swings in sales or profitability and refuse to blame only the economy, competition, suppliers or customers for bad results
- Demand that successful activities in your firm be repeated, rewarded and routinized, and surprises become anticipated and eliminated.
You know you are becoming an expert scout of your environment when you can:
- Anticipate what your customers, employees and vendors will demand and already have a solution that meets their needs and yours.
- Interpret the difference between what your target market says it wants and have the confidence to offer them what they need.
- Look ahead at least three months and anticipate what your business will need in terms of sales, cash, expertise, and time to meet your goals.
For most business owners, growing a business is the fulfillment of their life’s work and dreams. When your business is growing, you feel in control of your destiny. The decision to sell or further grow your business comes down to where you stand on keeping your business growing in the right direction.
If you are still full of conviction to make it more predictable and to continue to scout out your environment you should stay in your business and grow it. If not, you should sell it.
If you need further help, contact me at 412 973 2080 and I have a questionnaire I can step you through to create the confidence and conviction you need to decide if you should sty or you should go!
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