Flatten Your Organization If You Plan To Eventually Sell Your Business
Many small business owners intend to cash out at the end. They want to build a successful business and then sell it. That is the retirement plan, that is the reward, that’s when all the hard work pays off. It’s a great idea and a great plan, but have you positioned your business for a sale or have you created an empire that only works if you are at the helm directing and implementing?
The problem is that many small business owners are the quarterback in their business. They are the key salesperson, the personality everyone is committed to, the source of energy and direction, the micromanager who makes every decision, the only person who can really make the engine work. This may be a terrific plan for creating revenue but what happens if we take the quarterback out of the game? Then what? If the business is dominated by the owner, is there really anything to sell? When he is out of the game, can the team perform adequately or even at all?
Unfortunately, this is all too common an issue. In a pyramid organization with all roads leading to the owner/operator, with far less talent underneath the owner and with the personality of the owner being the personality of the business, what is left to sell when the owner is gone? Maybe nothing. If it becomes clear to any prospective buyer that the business is, in a sense, the alter ego of the owner, the sale is doomed. There will be no exit strategy for the owner as too much value is dependent upon the him and when the business is transferred, his value disappears and the business becomes either worthless or worth far less. Either one is not a good result.
A flat management style emphasizes the skills of the managers, and de-emphasizes the importance of the owner. This is a far more salable entity. It has been said many times before, the best plan renders the owner replaceable, not crucial, not the center of attention, acting as a leader but not in control of the day-to-day operations and not the only face to the customer base. The loyalty and revenue flow must be focused on the team–the business entity–not the owner, or there will be no sale of the business. Additionally, if the owner’s name is part of the business name, it is advisable to rebrand the business with a new name as soon as possible, moving away from the owner’s name to a more marketable concept.
Train, plan and review, that is your job as owner, not engaging in daily hands-on control and implementation. If this is necessary for some reason, flatten the organization as much as possible and work hard to move the spotlight away from you, the owner, and more towards the company and employees. Make the company, the team, or the mission the star of the show rather than yourself. Lose the ego and create a salable business. Remain the star and there will be little to sell if you want to move on. Train others in your organization to succeed or there is nothing to sell. This works, if you want a business you can sell someday. Replace yourself and then sell your business. It’s the only way.
