Currently I am representing a technology-centric business. It’s a great business, great cash flow, and it’s grown remarkably, especially considering that the owner is self-taught and has created all the growth personally. I’m much impressed with what he has accomplished.
The owner has stayed very, very close to the daily functioning of the company. In fact, there are certain parts of it that would not work if he was not there most of the time. And the business is a little niche-y, meaning that it has chosen a narrower market to operate in, so some buyers that are coming to see the business are afraid that they don’t know what the owner knows about the product line, and so they are too timid to make an offer.
(I’ll talk about the massive roadblock to entrepreneurship that timidity poses in another article, but trust me, it’s the most common reason buyers do not move forward, sometimes ever.)
Now, I know a lot about this particular business, and I’ve got a technology background. What my tech background tells me is that this business is not rocket science. The company buys inventory, sells it primarily online, ships it, and collects money. It provides fast turnaround times and great customer service, as indicated by its online reviews. It has virtually no debt. There are plenty of opportunities for growth and expansion. I could run it myself, even though I’m not familiar with the product line.
And why is that? Because there aren’t a lot of technical questions regarding the product line. The people and businesses that buy from the company usually know what they want the products for and how to use them. When there is an occasional hiccup, the consumer emails the business, and the owner emails an answer: try this, or send it back and I’ll send you a new one. If he doesn’t know the answer, he Googles it, and sends the link to the answer to the product buyer. Simple, right?
Wrong. There is one really wrong word in the paragraph above: owner. The owner is the wrong person to be doing that job. The right person to be doing that job, along with many other duties, is a General Manager. That is the position any business owner should hire before adding anyone else to the management team.
And why is that? Because the business owner should be a thinker, not a doer. Do you think Richard Branson runs any of his businesses operationally? No, he doesn’t. He sits on the beach on one of his islands, or on the sumptuous grounds of one of his mansions, or rides in his helicopter or on his yacht, and he thinks. That’s Branson’s job.
Branson writes a strategic plan, and he hires other smart people to execute on it. And yes, now he has plenty of money to start any new business venture he wants, but once upon a time his mother had to re-mortgage the family home to pay off a legal fine accrued by his first business. He was just like us. But perhaps just a bit more of a risk taker.
The importance of working on your business versus in your business—thinking vs. doing—cannot be stressed highly enough. As Yankees legend Yogi Berra once said, “You’ve got to be very careful if you don’t know where you are going, because you might not get there.”
What’s your business’ destination? Do you know what it will look like when you’ve arrived? Have you really thought it through and planned how you will get there?
Hiring a general manager can be expensive. It won’t always work out. You have to hand over a certain amount of trust. It’s a risky proposition.
But doing so can more than double, triple, or even quadruple the value of your business. And it’s something you need to start working on today.
Not sure how to go about it? There’s a process that will help protect you and your business and get you free to be the CEO. Email me, and I’ll send you our white paper on You-Proofing Your Business.