Best investment for small businesses?

[Paul Jenks]

The 'normal' business cycle paradigm has been to start, grow, sell, retire, die.

 

As has been discussed previously, the value of a business is usually measured by it's assets and ability to deliver measurable profits annually.

 

Typically, when the owner is removed from the equation, there is little or no resilience in the business to continue trading. I.e. It doesn't run for long or at all without the owner in the mix.

 

A business of this sort has little value beyond the assets and perhaps a telephone number and/or website that has some branding and customer loyalty. Difficult to measure and therefore even more difficult to agree upon a value.

 

A business begins to accrue real value as the owner dis-entangles him/herself from the day to day running and delegates responsibility to his/her team. True value develops when the team act entrepreneurially and grow the strategy of the business without the owner.

 

Dis-entanglement is a difficult process for most, given the amount of blood, sweat and tears invested into an operation. By the time many are ready to let go, they just want shot of it, so it can result in a less than graceful process.

 

If a business owner can grow the people in the team, and him/herself, as part of the business process, there should be no need to sell the business to realise long-term financial security for all involved. Having a mentoring role beyond the day to day operations and administration is key to the process of growth as we have more to look forward to without becoming fed up and disenfranchised with the whole 'business owner' role.