Knowing what you know now would you buy your own business? This is a question every business owner should address before it is too late. The sad reality is that most business owners never think about it until they want to get out of the business and then they realize all they own is a job and not a business. I mean really would you want to buy a job? Most people that have the resources to purchase a business could go get a job without buying one.
I just meet with a new client last week who owned a business and was considering taking a job with a company in the same field as his business after six years in business. As we began to discuss his situation it became clear what he owned was a job not a business. We discussed the possibility of selling the business but there was nothing to sell. The reality was that all the customers of the business were coming from contacts of the business owner there were no systems in place to generate new customers. Would you buy a business that was solely dependent on the relationships of the previous owner? Of course you wouldn’t but yet that is what some many business owners are hoping for when they are ready to get out of the business.
Additionally, the business owner didn’t have any documentation on what he did on a day-to-day basis. Of course when you are starting out in your business you are going to have to a lot of the technical work of the business. What most business owners don’t understand is they need to develop a system that can be put in place so someone else can do that technical work and allow the business owner to do the strategic work of the business.
Let’s pretend that you have a landscaping business and you have four hours of time that you can spend anyway you want. A lot of business owners would spend that time working in the business on one of the landscaping jobs and make let’s say $300. Was that a profitable use of the business owner’s time? Most business owner’s would say yes because they made $300 but I would say to them at what cost? What if the business owner would have spent those four hours developing a scheduling system that would result in less travel time between jobs. Think about how much that could potentially save the business over the next 12 months in travel time and fuel? I am sure it would have been more than $300. The business owner could have paid someone $60 dollars to perform the four hours of landscaping work that needed to be done and made a profit of $240 plus they could have saved thousands of dollars over the next several years because of the new scheduling system they developed. The business owner could have used those four hours to develop a new referral campaign that could generate thousands of dollars in referrals. There is so much more to running a business than just doing the technical work the business does.
Had my new client taken the time to work on his business and not just in his business he might have had something to sell. Instead he closed his six year old business and all he had to show for it was W-2 income he paid himself over the six years which he could have had if had worked for someone else.
A business can’t grow if the owner only spends his time doing the technical work. There are only so many hours in a day and only so many days in a year. If you are already covered-up then how can you grow the business where is the extra time going to come from? As a business owner you need to leverage your time to make the most of it. Start thinking about how you can spend your time that will produce the largest return on investment.