Like most business owners, I have spent many years working very hard on a business that I am extremely passionate about. It has always been a priority in my life and I have received great satisfaction from seeing the level of quality in things we have created.
When making our new TV show, No More Practice Transformation Series, a series about small business owners going through a business transformation, I started to realise that the things I value about my business are not necessarily the things that the market, and in fact any potential buyer in the future, would value. This realisation was quite a shock, but I know that I’m not alone.
This is a trap that I believe business owners and entrepreneurs fall into. Most of us are usually a specialist in something before we started our business, whether it is cooking, financial advice or creating great content – we tend to create a business around our passion. So naturally the things you are a specialist in, and are passionate about, are the things you value.
In filming the Transformation Series, we shot an episode featuring Martin Checketts, a talented and experienced corporate lawyer and succession expert. Martin grilled the business owners as if he was a potential buyer and then asked them to pitch to each other. Here’s what really hammered home for me in this scene:
1. Your people are an asset (or not)
He really probed the quality of the staff, how well trained they were and how much experience they had. Without experienced staff locked in, the business value was not going to be high in these small businesses.
2. Your revenue needs to be locked in and consistent
He deeply questioned the long term nature of the businesses revenue. Martin forced the business to acknowledge their existing revenue lines and questioned the businesses ‘ideal’ client, highlighted the threat of doing business with the wrong type of client and drilled home the dangers of being dependent on a handful of staff to provide the business these clients.
3. Being important is not an asset
Big red flags were thrown up at the potential of key man risk, this is something almost every business owner will face, and if you’re not anticipating an exit or are unprepared, the results can be disastrous for the value of your business. . The same can be said for those business owners who lead from the front and find themselves to be the most important person in that business to keep it going. If this sounds familiar to you, then the true value of your business is not realised. Because nobody wants to buy something that does not perform the same way or even better when you are gone.
By throwing down a confronting challenge to each of the business owners, Martin was able to get them to understand where the true value in what they had built and how their future focus had to be on that true value.
This did not mean that each of them could not still be passionate about the business. In fact, this gave them a chance to do even more of what they loved. By creating a business that lived and breathed without them, they would truly have the freedom to what they wanted.
This really resonated with me, like most business owners, I find a lack of time one of my biggest challenges. Like so many, I have a family that I value above all else, so feeling pressured about time spent with them takes away the enjoyment of what the business is achieving. To create time would be to truly realise the value in my business.
To help you identify the true value in your business, we have worked with leading experts from all fields to create the 30 Day Business Challenge. I urge you to take a look at what you could gain from joining the experience. My hope is that it becomes part of your journey to realising the true value in your business, and having the freedom to do anything and everything you want.
Discover more about finding the true value of your business here.
