Plenty of work to do before you stand back

Q: I’ve been told by several business people and other entrepreneurs that I should aim to make my business one that can run without me being there. Is that ideal and why? What can I do to make that happen?

A: You may have heard the mantra, ‘‘work on your business, not in the business’’.

Well it’s right up there with ‘‘You need an advisory board’’ in terms of misunderstood business advice. Both are, of course, correct, but only at the right time in the business’ life cycle. I have no doubt that there is no substitute in New Zealand small business for hard work.

Basically you need to get your hands dirty and know your business backwards, leading from the front and being everything from chief executive to packer to debt collector.

And of course, an owner-manager doesn’t get paid for overtime or have time to get sick.

However, once you get your business to a certain level and critical mass where your working capital is sorted, you have a strong flow of forward orders and some semblance of a clued-up team, it is time to think about how best to delegate.

That will eventually mean starting to look at who could help you run your business.

The reality is that if you don’t extract yourself from the grind you can’t be the master of your own business because you’re too busy fighting off the crocodiles.

By standing back a bit, you get a broader view and that also allows those below you to develop. Once you do get your business to such a level that it is not purely reliant on you, you start to build up business goodwill – the business will start to have a life and value of its own, beyond its founder.

Long term, as the business matures to the point of being well capitalised with a management structure and direction, then it is time to take it to another level.

Whether that is external capital, acquisition or organic growth, the business really has to be running as a business in a business-like way, with strategy and vision.

Then, and only then, can you be in the ideal position of staying involved in the business, even as a passive shareholder or looking to pass it on to other investors, whether your own family or through a management buyout or with external investment. It is then you can look to maximising your value.

The point is, you will have a choice because the business will be able to stand alone.

As I said at the outset, it needs to be the right time. Much like the Rugby World Cup, you need to focus on the game and its different stages, and the scoreboard will look after itself.