No one knows your business better than you do. After years of hard work and dedication, including long nights, long days, and one difficult decision after another, you become one with the company you’ve built.
As the son of an entrepreneur who rarely made it home before dark, I know what gritty entrepreneurship looks like. But after working with, for, and then becoming an entrepreneur, I also know the downsides of being too close to your business.
Perhaps more than anything else, the largest downside of being too close is that you start to lose sight of your company’s faults, threats, and opportunities. It doesn’t have to be that way.
Case in Point
If you ask any entrepreneur who’s looking to exit their business about his or her company’s worth, you will get a number that is usually three, four, or five times higher than an independent business valuation expert may say the business is worth. Why? Because this is the formula for most entrepreneurs who are selling their businesses:
What I need to retire * Boy, did I work my butt off = Sale price
If you ask an independent business valuation expert, the equation looks more like this:
3 years trailing EBITDA * Industry multiple (usually 2-4 for our industry) = Sale price
While this example may be a bit extreme, it proves a very simple point: When you get too close to the business, you start to lose a grip on real strengths and weaknesses.
Selling your business may be a long-term consideration, but the risks of business blindness can hurt other parts of your operation. Having made mistakes sitting in the corner office, I know that you sometimes miss important events happening around you. I was too busy staring at the forest, and I completely missed the trees. (Backwards? Yes, but that’s the point.)
Workforce Retention: It’s easy to forget to pay attention to the people who make our businesses great. It’s rarely because we don’t care or don’t want to, but because we figure things are going fine. If people aren’t complaining, they must be happy. I can tell you first hand that losing the wrong person at the wrong time can not only be painful, but catastrophic.
Customer Satisfaction: When is the last time you did a customer satisfaction survey? Do you know how happy your customers are? How many of your customers have you met with lately? A growing business often becomes disconnected from its customers because the leaders are distracted by the growth of the business. Those customers, however, are often great sources of knowledge for how you are doing and what you could improve.
Great Leaders Seek Perspective
Running a business requires a focus on profit, cash flow, and sales. Those things are all important, but they are built upon the backs of many individual functions. Together, they create the bottom line.
Those big-picture business objectives, like profit, are very important; however, those are byproducts of running your business well. Speaking to your employees and customers, and seeking help from the outside, is critical to making sure you don’t let your business blinders steer you places you don’t want to go.
In the search for business success, you sometimes can’t see holes in one area of your business that an outsider might see right away.
With business changing so fast, we can’t possibly know everything. So why don’t we get a little bit of outside perspective? No matter how much we think we know about our business, it never hurts to get the right insights from the right people.
This type of outside help comes in many forms, and NSCA’s Member Advisory Council (MAC) can serve as that “third party” if you need a new perspective. From helping with a reorg or creating business plans to establishing a social media presence or improving service department performance, the experts in this group have more than 125 years of combined industry experience. Our background and knowledge will help you view your business with a fresh outlook. —Dan Newman, Cofounder of V3*Broadsuite