Business value may start here, yet it can’t stay here.

Business value is all about business transferability. That value initially started with you, your hard work and the relationships you built. Y-O-U. But the value cannot stay there with you. Why? Because the more transferable your business is, the more value it has.  And that comes down to one question: “Can your business run without you?”  

 

One of the most important components of business transferability is for the business to be able to run without you, the owner.  

 

This is called “hub & spoke. The name comes from a story about a business owner who described his business as, “I’m the hub. Everyone comes through me for decisions, like spokes on a wheel, and I give direction.  We’re very efficient.” The owner was very proud of this system he had created. 

 

Here’s the problem – this system is not scalable, nor transferable, and despite what he thinks, it’s far from efficient.  Ever flown through an airline hub such as Chicago or Atlanta, and the weather takes a turn? It’s a mess!  The same thing will happen to your business.  At some point, there will be a breakdown at the hub (be it capacity, a 5D event, supplier issue, etc…), and the business grinds to a halt.  

Remember, buyers are buying the future. That means they want a business that CAN run without you because you’re not coming with it.    

 

Building a business that CAN run without you starts with these 2 items: 

 

 Systems Documentation: Begin documenting all the company procedures in a company operations manual.  This becomes the go-to for employees to know how to do something (how to open/close the business, how to do the accounting, etc…). This takes time, but it is completely possible with a little bit of process and discipline.  It will pay you back in spades.   

 

• Well-built management/leadership team whom, in addition to you, has the responsibility of running the business.  This is a pivot point in the business, moving from a lifestyle business (one that supports and feeds your lifestyle) to an enterprise business (one that can truly run without you).  An enterprise business has much more value.  

 

Are you ready to test the business’ transferability?  Take time away from the business.  Start with a couple of days of vacation AND FULLY DISCONNECT from the business.  When you come back, find out where things broke down, and then fix it with process and documentation in your operations manual.  Repeat, only take a longer vacation, and again, come back and find the holes, then fix them with process and documentation in your operations.  Repeat again and again until the business machine begins to run seamlessly without you as the hub.  

 

Remember, the game of business ownership is to create wealth.  For most owners, that is the end goal – to create wealth, exit on their terms, and to ultimately empower the next generation of ownership.  Increasing value is not about the end game.  It is about what you are doing today to drive value, that in turn provides more income today, and wealth and options for tomorrow.