Many business owners want to begin backing away from their businesses to have more freedom to travel or do what they want, when they want. Yet, they still want to maintain control and ownership of their businesses.
There are three things that must be achieved to allow the business owner to successfully back away from the business and work as much or as little as s/he wants without adverse effects to the company or the owner.
Define and Communicate What "Backing Away" Means to You
In order to start backing away from the business, the owner has to determine a time frame and define what "backing away" means to him/her in terms of time commitment, emotional involvement, financial guarantees, etc. Then, the owner must communicate all this information clearly.
Determine How Much Income You Need from Your Company
The business owner must determine the amount of income s/he needs from the business each month.
Develop Systems and Management Capable of Replicating Your Leadership
A company that can be managed and run successfully without the owner's participation and can maintain its growth and profitability is a valuable and highly-attractive company. Some of the same critical Value Drivers that increase the company's value will also provide the owner with the freedom to work or not as the owner sees fit. Key Value Drivers are:
- Increased Cash Flow
- Systems and Procedures that Improve the Sustainability of Cash Flows
- Documented and Sustainable Earnings
- Debt Reduction
- Growth Strategy
- Strong and Motivated Management Team
To create a business that can be managed and run successfully without the owner's participation and can maintain its growth and profitability, the owner must create repeatable, sustainable internal systems and develop and properly motivate the management team. The company must have systems and management in place capable of replicating the owner's leadership.
What the above describes is an Intermediate Exit Plan -- an Exit Plan that will enable you to ready the business and forge a path towards an exit, without giving up ownership.