Every business owner dreams one day of successfully selling their business and riding off in to the sunset with a professional life well-lived and money in the bank. That will be one of my clients in the next few weeks. Two partners started a business 30 years ago and are about to close on the sale of their business to the management team that has helped them run it. Proper exit planning with a unified strategy helped them do that.
Recently, we’ve talked about building transferable value and the importance of having a capable management team to exit your business successfully. That is certainly the case with this client. The owners picked people who embraced their core values and core focus. The management team was balanced in their abilities in sales, operations, and finance.
When it came time for the two owners to retire, they tapped their management team and gave them an opportunity to become owners and buy the business. The owners arranged an amount of equity to put towards the purchase and were able to arrange financing for the remainder of the purchase price. The closing will occur in about 30 days and these employees will become owners. But, how does a successful employee ensure they become a successful owner?
As with most things, it starts with mindset first, then skill set. In my experience, the major difference between having an owner’s mindset and an employee mindset is the vision. Owners don’t get stuck on the day-to-day grind (or shouldn’t if they are), but look at the long-term vision. An owner’s role is to create the company’s mission and vision and to create its growth strategy. Said another way, too many business owners are working “in” the business when they should be working “on” the business.
In addition, here’s a list of 3-4 things an owner should get their mindset around:
- Delegation. Without it, owners often become the bottleneck in the organization’s productivity.
- Stop working hard on the wrong things and work only on the things you should be working on. This is key to being effective (doing the right things) and efficient (doing things right).
- Think of your team as an asset. The collective brainpower of an effective team is a game changer.
- Having the mindset of a CEO from day 1 is critical. What should be the mindset of a successful CEO? We’ll talk more about this soon.
Finally, an owner or CEO should understand that the language of business is accounting and owners not only need to speak it, but they should also be fluent. Many employees who are about to become owners never took an accounting class in school and they’ve never had any on the job training in accounting. Therefore, they often don’t speak the language and don’t understand their financial statements and what the data is telling them. You can’t manage what you don’t measure and the financial statements of your business are the ultimate measuring stick of your performance.
Any employees who are about to become owners, especially the new CEO, should be fluent in accounting or get someone to help them interpret until they become fluent themselves.
