The One Simple Diagnostic Every Business Owner Needs Before Even Thinking About an Exit, Merger, or Succession

 

There comes a time in every successful business when the owner begins to think about, maybe dream about, exiting the company, merging or succession. For the ambitious entrepreneur, it can be a truly exciting concept - the next challenge, new horizons, a chance to do something completely different. 

But before anyone gets too deep into the fantasy of what might come next, there’s one very important question that needs to be answered, I call it the bus question and this is it: 

Could this business run without me if I got hit by a bus tomorrow morning?

For many business owners the answer is, very simply, no.

Some business owners and directors are proud to say they are putting all their time into the business but the reality is, if anything happened to them the business would come to a halt. Depending on how long they're out of the business, the business may not be recoverable. If that is the case, it’s at this point that a business owner or director should pause and reflect. Why is this? The challenge here is to actually take the time, to make sure your answer is truthful in all aspects.

Digging deeper

When you’ve asked yourself the question ‘Can the business run without me?’ and the answer is no, it's time to look how that has happened. You can ask yourself these questions to find out how and why. 

• What am I doing that is causing me to work so many hours? 
• What am I spending my time doing?
• Why don’t I delegate more?
• Why isn't there a person who can answer all the questions that are coming to me on a daily basis?
• What is it that I need to do to make the business run by itself? If I were to decide to exit my business, merge with another business or retire, how long would it take?
• If a crisis happens, who leads the crisis - is it you or a member of your team?

There is no shame in being in this position, you should be proud to have even taken the time to read the question and pause. Reading and answering the bus question in itself has triggered something within you. Change is necessary.

Past the startup stage

It’s a statement of pride for some people to say they work 100 hours a week in their business. That is understandable at the start up stage but as the business grows you shouldn't be working as many hours. There will always be times throughout the journey of the business that you will need to put in the extra hours, but when you come to a crossroads where you're considering retiring, exiting or merging in the coming years you have to reassess; where am I standing in the business? Am I hindering it or am I helping it to grow?

Keeping a log

I always suggest that directors start logging the time they're working under 3 different headings: home life, fitness and work. Then, under the work heading they need to get more detailed: billable hours, answering questions to staff, unnecessary meetings, meetings about which aspects of the business.  As an extra challenge, I ask them to have a separate column alongside the work headings they chose. In that column I ask them to keep specific details along the lines of these questions: What was the question I was asked ? By whom? Why was I asked the question? Could somebody else have answered this question, - and if not, why not? 

I ask them to do this for a period of up to three months but usually within the first month they start seeing what they are spending their time on. They start seeing which habits they need to change within themselves and find a list of challenges that now need to be prioritised. They will usually include some or all of these:

• Roles and responsibilities need to be reviewed and communicated.
• Clearer/transparent communications & more frequently.
• Where talent is lacking in the business.
• Where training needs to be provided and to whom.
• Organisation chart to be reviewed.
• Business process to be updated or documented.
• Crises team(s) created.
• Business values and mission to be reviewed.
• Business internal culture to be reviewed.

Small changes add up

These small measurements, reviews and time to reflect can have a significant positive effect on the business and will not only affect the business bottom line and staff morale but also the director’s peace of mind should anything happen to them and they need to step away from the business for an extended period of time. 

This time spent now, gives you an advantage when you do decide to sell, retire, exit or move into a new role. Decisions are made faster and with a clear head because there is a fuller understanding of the business and of you as the business owner yourself. It is so easy to lose sight of the business when you are kept busy with unnecessary meetings and conversations. 

That’s why you should revisit this question once or twice a year:

Could this business run without me if I got hit by a bus tomorrow morning?

If you’re a director or business owner who would like to help navigating the issues that the bus question raises, get in touch with me today to learn how we can work together.