I recently chatted with a successful business owner about his summer vacation plans. It involved a 4 day get away that was jammed in amongst multiple cross-country business trips. “Bob’s” statement was that he was keeping his commitment to his wife, but was certain it would take at least 2 days to unwind.
In Bob’s case this vacation may be just what he needs at this point in his business. For business owners who are within 1-7 years of a potential business exit or significant owner transition, summer offers an excellent low-risk opportunity to stress test the business. This allows owners to see how well their business runs without them – a critical attribute for maximizing current profitability and future enterprise value at sale.
If you are intentional, you can gain insightful answers to these 3 critical questions regarding a future business transition – and all while sitting on the beach.
- Are my people ready? Your temporary absence will allow you identify staff that rise to the challenge and those that do not. Who is able to make decisions in your absence? Who steps up and takes responsibility for “getting it done”? Who freezes up and puts everything in the “wait for the boss” pile, no matter how small? Who uses your absence as an opportunity to lower their performance?
- Are my systems ready? In many cases, low to mid market business owners have placed themselves as the central nexus for the business systems and processes. This is understandable. When the business was small it was natural that the owner in some shape or form touched most if not all systems and processes. But as the business grows, it is essential that the owner build systems that are not dependent on him or her. A business with systems that are dependent on the owner will receive a lower valuation from a potential buyer. So in your temporary absence, what systems or processes stopped working? Where did bottlenecks occur in the business? What paperwork showed up in your in-tray or email that required your attention upon your return? What can you learn from this information about where you can make your systems less dependent on you?
- Am I ready? While vacation is a somewhat artificial environment, it can be a useful context for thinking about what the business means to you and who you are without the business. Many business owners meet core motivational needs of autonomy, relatedness and competency through their business. When the business is not there, these motivational drivers must be satiated elsewhere. As you reflect on your vacation consider your own state of mind; Were you constantly pre-occupied with work? How many times did you “check-in” with the office? Did your family members describe you as present for them, or were you there in body only? Do you have places already outside of your business where you can provide something of value to others? How easy was it for you to relax?
The answers to these questions can form the basis of preparing yourself for a forth-coming business exit.
Further insight can be gained by taking our TRANSITION READINESS ASSESSMENT.