Apr13
Why Build a Business That's Bigger Than You?
There are 27 million business owners in the United States. Over 50% of these owners want to sell their business in the next 10 years, according to a recent survey quoted in this week’s TIME magazine. Only 1% of them will.
The TIME article goes on to explain why this happens,
“Take, for example, the avid photographer who starts her own business. She shoots weddings, expectant moms, family portraits, ball teams, and prom queens. Her passion for photography is contagious, and her customers love her work and tell their friends about the wonderful photographer who shot their wedding pictures.
“Word spreads, and the photographer gets busier. Mistaking her personal success for that of her business, she hires a junior photographer to share the load, but customers like the owner’s work, not her underling’s. Customers who are referred ask for the owner herself. Returning customers asked for her too. Soon she is busier than ever, and her younger helper is underutilized.”
This scenario will repeat itself thousands (millions) of times over, and it’s a recipe for disaster. Here’s why you must build a business that’s bigger than you:
Reason One: Burnout
One of my clients, an incredibly talented graphic designer, recently told me, “You know, I’d just like to be able to take a vacation this year.” We’re working on building his business because everything in it right now depends on him.
That means he’s on the clock 24 hours a day, 7 days a week, 365 days a year. For a creative, that spells burnout. Really, that spells burnout for anyone, and why you need a business that’s bigger than you.
A common misconception, however, is that burnout’s just a physical/emotional phenomenon. But the impact of burnout is also financial. Bad decisions, inattention to detail, a lack of courage in the face of increased competition, and apathetic leadership are all a result of burnout and will destroy your business.
Reason Two: Profitability
Most small business owners work harder, longer for less money than they ever would for someone else due to the simple fact that they haven’t learned how to multiply themselves in others. If you are your business’ owner, manager, producer, marketer, sales person, chief cook and bottle-washer, you are severely limiting your ability to compete in the marketplace. And these limitations impact the bottom line. You’ll never maximize the financial potential of your firm when everything in it depends on you.
Building a business that’s bigger than you doesn’t mean starting the next Microsoft or GE, but it does mean assembling a team around you who are just as committed to the cause of your company as you are. The synergy of a group of even 3 or 4 people vastly outperforms the solitary efforts the same individuals.
Reason Three: Transferability
If you are your business, when you try to sell it, what do you have to sell? Nothing. Here’s another reason you must build a business that’s bigger than you, transferability.
Think of it this way, what’s the difference between owning and renting a house? If you’re renting a house, when it’s time to move, you walk away with nothing. Even if you’ve been at the same location for decades, you receive no share in the value of the property as it grew over the years. In buying a home, when it’s time to move, you sell your property and pocket the profit.
If your business isn’t bigger than you, you really don’t own a business, you own a job. Nothing wrong with owning a job, just like there’s nothing wrong with renting a house. Just realize, however, when it’s time to retire, there will not be any equity in the company you’ve worked in for years because of its dependence on you and the lack of accrued equity over time.
For more information on this topic read: FIVE FATAL FLAWS: Flaw #3 – Income without Equity.
Reason Four: Legacy
For many of us, however, what drives us in our business is not just profit. We are driven by a cause. We believe at the core of our being that our product or service improves the lives of our customers, provides jobs for our employees, and opportunity for our vendors who in turn support their families, contribute to the community, send their kids to college, and so on. We believe—and it is true—that by this we are making the world a better place.
If we do not build a business that’s bigger than ourselves, our cause will die with us. The flame will not burn for the next generation, the baton will not be handed off to the next runner. In short, we fail to leave a legacy.
If you lead a non-profit organization, this is even more critical. You have constituents who have come to depend on your services and donors who have sacrificed to support your work. You must care about your cause enough to do whatever it takes for it to continue beyond yourself.
Success without succession is not success at all. Leaders who truly succeed duplicate themselves in others, leaving a legacy for the next generation.
Interesting. But you’ve just described the difference between art and business. Would you buy a Monet, or a starving artist oil painting. One is a Master, the other is production line business.
— JF Bland · Apr 13, 07:31 AM
Great observation. That’s truly the fear when one builds a bigger business, the loss of artistry. But is it possible for a cadre of talented people working together on a masterpiece to also create value?
— Bill Zipp · Apr 13, 07:57 AM
That last paragraph really sums it up Bill. I don’t think you’ve truly mastered a craft until it’s duplicated in others. That’s the measure of influence. Building your company with a plan of succession or sale, whether it happens or not, sets it up for success.
There’s more to this. Duplication doesn’t have to be within your own company. It may be a mentor relationship or even a competitor trying to emulate your success. Maybe it’s leading an active learning group. All are evidence of duplication.
— Matt · Apr 13, 10:00 AM
You’re exactly right, Matt. Being able to teach someone else to do something as good or better than ourselves is proof of having mastered a craft. It completes the learning loop.
— Bill Zipp · Apr 13, 11:36 AM