March 29, 2021 by Jason Contant
Highlighting which areas of your brokerage can run without you is a crucial exercise for any broker principals who want the sale of their brokerage to be a happy and fulfilling event, according to information adapted from a recent Harvard Business Review blog.
The recommendation to “work on your business, not in your business” is one of three pieces of advice from K Srikrishna, an associate teaching professor of entrepreneurship and innovation at Northeastern University. He is the author of The Art of a Happy Exit — How Smart Entrepreneurs Sell Their Businesses.
Learning to let go is not easy, but it has many benefits, Srikrishna advises. For one thing, it frees up brokerage principals so they aren’t hands-on to the point of “where the quotidian minutiae can drown you.”
Srikrishna recommends a simply daily tracking exercise, in which a business leader — such as a broker principal — jots down what they are doing every 30 minutes for two weeks. “Make note of the times when someone in your organization, a customer, or a business partner reaches out to you to make a decision,” Srikrishna wrote in How to Make Selling Your Business a Fulfilling Experience, published Friday. “At the end of each day and week, take a look at all that you did or handled, and identify who else within your organization could have done it instead.”
Another exercise is to write down instructions you’d leave for your team members if you were going to be away for a two-week vacation without phone or internet. “This will highlight which areas of the business can run without you, which areas cause you the most concern or stress, and what you believe needs to be absolutely handled by you. Examine if that is true.”
The second piece of advice is to plan for a sale well ahead of time, even if you’re not sure you want to. “One of the best ways to ensure your business stays on a healthy trajectory is to act as though you plan to sell it — even if you never intend to,” Srikrishna wrote. “It ensures that you and your entire team are focused and held accountable.”
Srikrishna used the example of Tim McCarthy, who started a consulting business that helped restaurant chains identify and address the performance of the bottom 10% of their outlets. When McCarthy told his accountant he wanted to retire by age 50, the accountant pointed out a problem: McCarthy couldn’t sell a consulting business, since there was no intrinsic value to it without him in it.
McCarthy then set out to transform his business from a consulting service to a marketing database company. He hired an investment banking firm to identify which issues within his company needed to be addressed to make it attractive for a potential buyer.
Once five major issues were identified, senior officers began running the company on a day-to-day basis. McCarthy began working mostly from home. “Over the next four years, they hit all five of their targets attracting interest from prospective buyers and ultimately successfully sold the business,” as Srikrishna observed.
The final suggestion is to seek clarity on your life’s purpose well before you are considering a sale. Ask yourself:
“Ultimately, in my research I’ve found that the biggest cause of seller’s remorse is when the entrepreneur’s life feels directionless after the sale,” Srikrishna wrote. “After all, there’s only so much golfing or boating one can do.”
When entrepreneurs internalize these three lessons — working on the business and not in the business, running the business as though they plan to sell it, and seeking clarity on their purpose — “happy outcomes result,” Srikrishna said. “Not just for themselves, but also for their businesses and their people.”
Feature image via iStock.com/jacoblund