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There’s one thing you should always do before getting involved with owning a business – work out how you are going to get out. And yet this is often the last thing people think about.
It’s something I’ve been thinking about for some time now (as evidenced by the fact that I recently sold my business!).
Brilliant Business Advice
I like to boast that I own the largest collection of unread business books in the UK.
I like the idea of business books, but I’m more of a ‘learn by doing’ kind of guy. Or, to put it another way, arrogant and vain.
The only business book I ever read cover to cover was given to me by my father when I was 18. What They Don’t Teach You At Harvard Business School by Mark McCormack is basically a collection of anecdotes that build together to make the main point of the book – be nice to people. Do what you say you’re going to do, return people’s calls, be honest, and you will do well in business.
It’s great advice. Just because some highly successful businessmen are nasty people doesn’t mean we all have to be that way.
But there are even more things that a business owner needs to know that Mr McCormack doesn’t go into. Sharon Tanton works with Sonja Jefferson as Valuable Content, a marketing agency that specialises in, would you believe, content marketing. Sharon wrote this blog about 50 surprising things she has learned about owning a business (number 41 particularly resonates with me, and with Mark McCormack).
The Reality Of Owning A Business
Trouble is, there is no school for this stuff. When you set up your own small business you want to do the thing you enjoy doing. Then as the business grows you have to be finance director, act as someone’s mum and unblock the toilet all in the same morning.
People sometimes say ‘You’re so lucky to be running your own business, you have such freedom’. Actually, it is the opposite. A member of staff can get another job. The owner can’t. They are trapped, stuck in the business forever (at least it can seem like that!).
And the decisions you make, they affect other people’s lives. Every business owner dreads having to tell someone they are being made redundant. And no-one tells you what to do when a member of staff threatens to commit suicide.
Being the boss can be a very lonely place. Aside from the sacrifices and pressures that no one appreciates, when you do finally hit the brick wall of retirement, it can be really hard to know what to do next.
Which brings us to the thing that What They Don’t Don’t You At The Harvard Business School doesn’t teach – succession planning. How to get out.
Real Succession Planning
It’s a truism that most business owners leave succession planning too late. It’s not just finding someone to take over, whether from within the business or selling to a third party. If the priority is maximising value or looking after clients and employees (it’s not easy to do both), exiting a business takes time – years – to get right.
I’ve been doing a lot of work on succession planning over the last few years, leading up to the sale of Ovation to an Employee Ownership Trust (EOT). The bottom line to the process is this: whether you are selling to your employees through management buy out or to an EOT, you need to have built a sustainable business.
Employee owned businesses do look and act differently to one that is being fattened for a third party sale, however. So decide on what route you want to take when leaving your business; then spend a few years getting the business into the right shape; then when you actually take the final step to succession, it will be a whole lot easier.
Getting out by the employees taking over – something which I think Mark McCormack would have liked!
Chris Budd is a Diploma qualified business coach. He has set up the Eternal Business Consultancy to help others transition into employee ownership. He can be contacted on chrisbudd@ovationfinance.co.uk