If you’re a business owner, you’re probably successful. But, is your business significant, or just successful?
If it’s successful, it provides you a good income. You might own a lovely house (or two). Nice cars. Travel well. Kids’ college is paid. If the business you own has helped you achieve these rewards, you probably feel pretty successful. And you should. But, I want my companies to be more than successful; I want them to be significant.
A significant company has value beyond income. It is owner-independent and transferrable. It runs efficiently and has a diversified customer base. Its culture attracts workers and excites current employees. We begin the journey to significance by looking at our business through the lens of an acquirer.
You may currently have zero interest in selling your business. If you prefer, let’s reframe it — think about running your business as if you will go public and file an initial public offering, or IPO. If you run your company as if you are about to showcase it to an acquirer(s) — shoring up your weaknesses, defending your strengths, acting on opportunities — then your company will be more significant. A significant company is more successful at increasing the owner’s income.
You may be decades away from wanting to sell, but starting to formalize your operations today will help you predict your business’ future. You can’t do that until you free yourself from the activities that someone else should be doing for you. Once you do that, we can delve deeper into the tasks and strategies required to make you run like a public company.
Those steps can include taking the uncommon step of assembling an outside board of directors.
Jay owned the successful private company Blinds.com and did just that.
Jay’s board met quarterly, and each of his senior managers was asked to prepare and deliver presentations to the board. He went further and hired an accounting firm to complete a full audit of his financials each year, although all he needed to satisfy the IRS was a simple tax return.
By 2014, Jay’s company had grown to 175 employees and $100 million of revenue. The growth of this significant company, coupled with fastidious bookkeeping, attracted Home Depot to acquire them. Jay wouldn’t have been able to do this if he didn’t allow his management team to shoulder the bulk of his work burden.
Going from successful to significant requires time and dedication. You start that process by firing yourself (at least, from most of the work you have been doing).
There’s a great story about this advice being handed down by Warren Buffett, CEO of Berkshire Hathaway, to his private pilot.
Mr. Buffett’s personal pilot, Mike Flint, owned a successful airline company. But, how could Mike pass up asking Mr. Buffett for business-building advice? As Mike explains it, here are the three steps Mr. Buffett advised him to follow to become significant:
Step 1: Write down your top 25 goals;
Step 2: Review the list and circle your top five goals;
Step 3: Put the top five goals on List A and the other 20 on List B.
As Mike tells it, he confirmed with Mr. Buffett that he’d begin to work on List A. When Mr. Buffett asked what of List B, Mike replied, “The top 5 are my primary focus, but the other 20 come in a close second. They are all important, so I’ll work on those intermittently.”
To which Mr. Buffett reportedly replied, “You’ve got it wrong, Mike. Everything you didn’t circle just became your Avoid-At-All-Costs list. No matter what, these things get no attention from you.”
If you find yourself in a position where everything, from operations to sales, must flow through you, consider shifting your structure so you can improve the significance of your business. If you try to take on too much, you’ll have a difficult time improving and evolving.
You should set a goal to quietly slip into the background and let your team take center stage. This is how you advance your business to the next level of performing more like a well-governed, public company, resulting in higher income. Here are some steps to follow:
Re-brand. When Donald Dion, of Williamstown, sold Dion Money Management (DMM) to Focus Financial (which later went public), Focus changed DMM’s name to Atlas Private Wealth. When your name is on the marquee, everyone wants a piece of your time.
Hire a president. Beth owned an information technology and social media company in Adams and was experiencing rapid growth. She didn’t have the time to finish her “List B,” and trying to do so kept her from working on the more essential items on List A.
Beth hired a president, and the new president was able to leverage his title to exercise real authority to solve customer problems and delegate tasks to other team members.
Re-route emails to your assistant. I don’t do this personally, because I’ve trained myself to turn off the bad habit of halting important work to respond to new emails urgently. I forward nearly all my emails to co-workers because few of the emails require my input.
But, it took me years to get there. It would have been smarter of me if, years ago, I let my assistant protect me from nonessential emails, just as a good receptionist will shield us from nonessential phone calls. Many of the emails are essential — it’s just not necessary that you get them.
Businesses often operate as if their sole purpose is to fund the owner’s successful lifestyle. But, the most substantial companies are run with accountability — as if they are going to be scrutinized by an acquirer or shareholders. Running your business as if you are preparing to go public will make it more predictable, more attractive and help boost cash flow.
This article originally appeared in The Berkshire Eagle on March 1, 2021.