Why did you go into business and what do you want to get out of it?
Business owners of technology solution practices come from a variety of backgrounds. What is even more diverse are the reasons they went into business. Those who grow or stumble into the role of business owners often don’t realize the complexity. Many are required to build strategy, understand direction, interpret financial forecasts while setting the budget, forming partnerships and hiring stellar talent to steer the company.
This type of pressure keeps many small businesses owners awake at night wondering, “how did I get here and where I am going with this business?” Perhaps you have asked yourself, “What is the reward for all the long nights and weekends spent troubleshooting a network over the phone or investing into high-risk salespeople?” Even more surreal is the truth that you may be like many of the entrepreneurs before you that have come to terms with the fact that they are “unemployable” and are no longer able to work for someone else and are destined to do what you do.
What’s ahead for the entrepreneur-business owner who has it all on the line?
Do you continue to plug away at the daily issues or do you pause and consider what you want from this sleepless, risky journey that you have embarked upon? There are two important steps that will help you determine what you want from the business you have purposefully or accidentally started, and will help you work towards a defined goal or outcome.
The first step is to know thy self. What type of business owner are you?
You might be a lifestyle business. You started a business because you enjoy being in business for yourself. The individuals on your team may have been with you for a long time and they often feel like family. You are happy with the set amount of revenue that the business generates, and your goal is to maintain that revenue level. You know that more growth would require hiring more people and to expand your operations. More people to manage and a larger operation base is not for you, but you want to be competitive as a means of maintaining the market share you have today. The lifestyle you have created may be what drives you. Retirement holds many options and now is an appropriate time to begin considering your end-game goal.
By some degree of contrast, you may be a growth business that wants to build the value of your business for the possibility of a sale and/or merger. In your desire to grow the business, you may consider acquiring other business to outperform organic growth. Your plan is to achieve greater economies of scale through merger and acquisitions. You have surrounded yourself with a team and your measuring stick for success is growth in a capability, vertical market and/or geography. Processes drive your business and development of human resources, tools, and intellectual capital are foundational to your ability to grow. While you may enjoy the lifestyle the business affords you, your main target is growth, and you are willing to sacrifice time and material luxuries to achieve this goal.
The second step is to determine what goal/outcome you are working towards.
If you are a lifestyle business, what do you plan to do with the business when you retire? Is your goal to sell the business to someone inside the business? Maybe you want to pass the business along to a family member through succession and collect a paycheck upon retirement.
As a growth owner, is your plan to grow the business for sale? At what price point are you wanting to sell? How long will it take you to get to that price point? Maybe you have partners in the business and some point you plan to buy out those partners and sell down the road.
At the End of the Day…
Whatever the reason you have gone into business and you desire to leave your business (someday), you should:
- Understand the type of business owner that you are; and,
- Clearly know what you want to get out of the business.
Bering McKinley has designed a Business Building Block Series around the options you have as a business owner to craft and map your business outcome and goals upon retirement. We will layout different options for both the Lifestyle and Growth-oriented owners and provide defined paths for helping you achieve your goals.
Listen to the webinar held on May 9 with George Siechio of Cogent Growth Partners and Josh Peterson of Bering McKinley on “Demystifying the B.S. in the Valuation of Your Business.” This webinar provides a no-nonsense, eye-opening perspective on the hurdles that keep your business from its true sale potential and how to determine the true valuation of your business.