It’s a question I ask so many entrepreneurs and it gets some interesting responses.
For many, they set out to build a business - that is, an asset they can later sell on and realise the value, but they never actually achieve that because all they have done is built a more demanding job than the one they left!
Now, for some, who want a lifestyle business which revolves fully around them, and they are perfectly content with that, then that is fine.
That is a decision that is open to any of us, and if that is the direction you want to go in, then go for it!
In my case, that is the direction that I have chosen and I am perfectly happy with that decision.
However, for many, they create an entity that is what I call the “fur lined mousetrap”!
What I mean by that is that they are making a good living - and have built a very nice lifestyle for themselves and their families - but they are trapped by that very same lifestyle!
You see they have built a business where its very existence is completely dependent upon them to continue! Okay, if that is your intention, but if not? Pretty frustrating place to be!
If your strategic intent is to create an entity that has a financial value that you can sell on, then that value must not be dependent on you staying on!
The value put on your business will be a multiple of turnover and/or net profit – but the size of that multiple will be determined by the sustainability of the business going forward. So if the key element in the sustainability is you, then the multiple will be very low indeed.
Many of my clients have faced this dilemma - and there is a solution, but it takes a change of mindset and the implementation of a strategy to ensure that you can walk away with the money in your personal bank account - and not leave it in the company account!
Is this an issue for your business? And what you have done to resolve it, if anything!