Business Owners are a special breed. Risk tolerant, comfortable in chaos, willing to miss a paycheck or two because, well, things don’t always go the way you want them to go.
The risks are taken and the chaos endured because the rewards are so compelling. You don’t have to put up with a boss (huge!). You can take time off without getting permission. You get to do something you like to do, run things your way, and hopefully enjoy the fruits of your success.
Now, success can be as much about the rewards of being your own boss, as about the money. Not all business owners make, or ever will make, a lot of money. But…
Let’s talk about the owners who want to.
Financially significant success requires a mix of the basic talent you bring to the business, enhanced by an ever-growing awareness of the teamwork and disciplines needed to manage to a higher level. Those disciplines aren’t necessarily there early on, but lack of discipline doesn’t scale.
As we work with our owners to make their businesses investor-attractive, we’re struck by some common practices that actually reduce the sale value of their companies. These are pretty common “owner privileges”. See if you can pick the culprits out of this short list… (hint: 3 are the culprits)
Revenue & Cost Planning
Personal expenses charged to the company
Unreported cash deals
Monthly financial review
Non-working family on the payroll
Weekly production meets
Each of these “owner privileges” robs the company of investor value. So while they might seem a pretty harmless way to have fun and avoid some taxes, once you start thinking of your company as a potentially sellable enterprise, the disciplines must notch up.
The fact is, as a business manager, you should be totally focused on enhancing disciplines that increase your bottom line, and eliminating practices that reduce potential value. You’ll end up with more taxable income at the end of the year, but that’s what happens to companies that make money. They pay taxes.
And if the thought of that is disturbing, remember that the joys of owning your own business include not having to take anybody’s advice!