“If your business depends on you, you don’t own a business—you have a job. And it’s the worst job in the world because you’re working for a lunatic!”
Michael E. Gerber, The E-Myth Revisited
Ah now I see why I am so stressed every day! I am working for a nut case!
But seriously, are you stressed because there is not enough time in the day to get everything done? The harder you work, the more work there is to be done. Sound familiar? The most important question I have for you is… are you free from your company?
If you were to leave the country for 2 months, what would happen?
If an image popped in your head where sales came to a screeching halt, your customers started leaving and the workforce was bickering over who calls the client back with the bad news, you’re not alone. But beware; you are in the owner’s trap.
Why is this bad?
Well first of all, why would you want to have a job that you can never leave???
If you are working for someone else at least you can submit a PTO and someone else will pick up the slack while you are off sipping mojitos on the beach.
You started your company so you can do what you want when you want. It was about autonomy wasn’t it? Building something, doing it better than the rest of the market does it etc. etc.
But if you end up being the only one capable of delivering your product or service, you’re basically doing completely the opposite. By becoming that single point of failure, the business is running you rather than you running it.
The E-Myth dubs this situation the technical entrepreneur i.e. Joe Shmoe the plumber who was sick of working for his father quit and started his own company, where now he does the plumbing for himself.
But he is still plumbing… and now he has additional work like payroll, accounting, sales, etc.
So he gets busy and hires another plumber. And then another. And another. But it’s still him who takes the calls for all the new jobs. The day he leaves the business is the day the work dries up.
Worse, even when he’s still in the business, the work from his other plumbers gets sloppy. He starts picking up more hours to do the job right because no one works as hard has he does.
Caught in a trap
This might be a little dramatic but you get the picture. The bodies fill up around the entrepreneur who has the technical and industry expertise and can deliver the product or service better than anyone. The bodies need management and the growth of the business needs management, but it is almost impossible to do this effectively if the main man is bogged down in the day-to-day fundamentals.
Let me say it again… this is just a job. Yes it is a company. But at the end of the day it is still just a job. No matter how big the company is. Even a $20 million company still has the potential to revolve around one person’s skill set and direction.
How do you know for sure if you are in The Owner’s Trap?
- ) The business slows down when you are not around.
- ) Customers come to you with problems.
- ) Your growth has reached a plateau.
So what’s the big deal?
Not only is this incredibly stressful, a company that is run like this is many times worth just one year’s earnings. No one wants to buy a company that is dependent on the owner. Many business owners are astounded at just how low a valuation they get for their business when they first think about selling. They assume that because their company turns over hundreds of thousands or even millions every year that they are sitting on a gold mine, but then comes a nasty shock.
What if a large chunk of their revenue comes from clients/customers that were brought to the table by the business owner? This could easily fall away once the owner leaves, and any buyer knows that.
What if day-to-day operations would be at risk without the owner? It’s the same thing: a big negative for any buyer.
This kind of situation generates a lot of business for an exit planner like me – we’re often brought in to help restructure a company that has become too reliant on its owner – but how about saving yourself a bit of money and just doing it yourself?
Changing a company isn’t just a one-day project, but you can change your mindset right now. And remember, it isn’t just a matter of selling. Even if you have no intention of selling up any time soon, you’ll never regret the day you got out of the owner’s trap.
Benefits of getting out of the owner’s trap:
- You don’t have to do all the work even if you don’t want to sell.
- Take more time off.
- Make more money.
- Build a company that can last after you are gone.
- Sell a company that is worth a bunch of money.
So get outta that trap!