KEY TAKEAWAYS:

1. Business owners who unchain from the business create opportunities for growth and sustainability.

2. Build a business that produces an income stream for the business owner — without his or her active involvement.

3. The more future-proofed a company is, the higher its valuation.

4. Getting key people involved creates alignment and engagement.

5. As a business owner, focus on quality of life and the big vision planning for your company.

 

In the 1950s Elvis rocked the stage with “All Shook Up,” President Eisenhower signed a law for our national highway system, and the average life of a company on the S&P 500 was 60 years.

Life was pretty good.

Today, Elvis has left the building. Elon Musk is paving the way to Mars. And the average life of a company on the S&P is less than 20 years. Mind-blowing.

According to a report by Wall Street firm Credit Suisse, reasons for the shorter stints include disruptive automation, the cloud, and a rise in M&A activity. Trickle down economics teaches us that what happens to the big boys eventually happens to growth-bound businesses. These are the ones itching to break through the 100-employee ceiling.

In Apex’s work with business owners and CEOs, we’ve found that future-proofing a business starts at the top. Here are five questions for a company owner to ask. These help solve the puzzle of how to grow a small business and plan for sustainability.

1. As a business owner, am I too close to the business?

Struggling with this question probably means “yes.” The single, most valuable advice we give business owners: Let go. Get out of people’s way so they can do their best work.

Of course a business owner has key leadership benchmarks tied to company goals. Leaders should be recognized and rewarded based on their ability to achieve these goals. Such strategic thinking and “doing” advances a company forward.

But here’s the reality: growth-minded businesses didn’t start out with dozens of employees.

They began with a few people doing ten different jobs. If that said founder continues focusing on sales processes, accounting procedures, hiring, marketing campaigns, vendor relations, and other day-to-day tasks, he or she will become the company’s Swiss Army knife. Owners who unchain from the business create opportunities for growth and sustainability.

2. Can this company run without me?

If you got through the first question unscathed, this one may be the “gotcha.” A business that can theoretically run without the owner is the heart of future-proofing a company.

It’s kind of like building a business to function without you. (That’s a good thing.)

Letting go actually provides for employees and families better. A business owner approaching retirement creates a lot of anxiety among their team. Mitigating that exposure improves morale, retention, and employee engagement.

At the end of the day, you want a business that produces an income stream for the business owner without his or her active involvement. You want happy, confident employees. You want a business valued at the highest number, which leads to the next question . . .

3. What do I want my business to look like in five to 10 years?

If you can see it, you can do it. Business owners who identify their personal goals can and should achieve them through the business. The business should provide you with two main resources: time and money.

Envisioning what you want as an owner creates opportunities for leadership-minded people in the organization. Plus, the more future-proofed a company is, the higher its valuation. Why? Because you are selling a business versus an amalgam of business plus owner. There is less risk with a business than a company dependent on one person. When risk goes down, people oftentimes pay more.

4. Are my key people involved in leading the organization — today?

Getting key people involved creates alignment and engagement. Employees feel like they have ownership. Their accountabilities and performance are then measured based on things they control. They have a say.

Seek their input and their recommendations and factor the good ideas in. Ask for their help. A business owner can’t future-proof a company alone. Empower your people. Convey that the company’s plan is their plan. Make them part of the goal planning. Then manage them toward the goals, like a great coach mentors along the sidelines.

5. Am I working hard on the right things?

Sometimes business owners work too hard on the wrong things. Why? Because they think they have to manage everything in the company. If the organizational chart is more flat than a pyramid, then future-proofing your company is job one.

Redirect your responsibilities as an owner onto others and make sure they understand the “why” behind their goal. Spend your energy there. Say: “This is what we are trying to achieve and how we are doing it and why.” Then give them the wheel. As a business owner, focus on your quality of life and the big vision planning for the company. Then everyone wins.

 

Apex CPAs and Consultants, Inc., is the largest CPA firm headquartered in the Tri-Cities. Apex’s FutureBiz program helps growth-minded business owners achieve life goals through the success of their business. A member of the American Institute of Certified Public Accountants and the Illinois CPA Society, Apex undergoes a voluntary peer review every three years and has received the highest rating issued under the program since the firm’s inception in 1998. Contact Apex at 630-584-4555. The firm is located in St. Charles, Ill.