Raising Your Business Like a Child

Raising Your Business Like a Child

John Warrillow on behalf of Matt Gilbert

August 14, 2020

Why did you decide to become an entrepreneur?

If you’re like most owners, you aspire to have the freedom that comes from owning your own business: 

  • The freedom to decide how you spend your time
  • The freedom to choose whom to work with and to avoid people who drain your energy
  • The freedom to make as much money as you deserve

This desire for freedom often leads owners to aspire for a bigger business, which they think will give them what they want. Unfortunately, most owners who strive for more revenue or profit as their primary goal often have:

  • Less time because it's spent managing an ever-expanding set of offerings
  • Less freedom because complexity inevitably leads to conflict
  • Less money because any available cash is reinvested in growth

So, in many ways, growing a larger business gets you further from your ultimate goal of freedom.

Instead of thinking of your business as something to push harder and faster, there’s an alternative that may get you closer to what you want. Think of your business as a child, and your role is to guide her into becoming an independent, thriving adult. 

If your goal is to create a business that can thrive without you, you will start to make different decisions. That demanding customer who wants your attention on their project no longer looks so attractive. That exciting new product that’s going to require you to sell no longer looks worth it. 

By focusing on the role of parent rather than business driver, the demands on your time lessen as your employees pick up more of the load. You may also find your business selling more as you build a team of salespeople rather than relying only on yourself to drive the top line. The ultimate irony is that your business may end up being more valuable than a larger peer where the owner is still mostly responsible for sales. 

Acquirers want businesses that will survive the loss of their owner. In many cases, they will pay a premium for companies where the owner is in the background. Consider the case of Damian James, who sold his network of mobile podiatry clinics generating $11 million in revenue for $13.2 million. He credits much of the sale to the fact that he was no longer running the businesses day-to-day and had reduced his time commitment to just one or two days per week. 

David Hauser started Grasshopper, an Internet-based phone system he built to $30 million in annual revenue before he sold it to Citrix for $165 million in cash and $8.6 million in stock. Hauser was down to working just one day per week at the time of the sale of his company. 

Growing revenue and profits will be valuable to an acquirer, but if you make them your only goal, you may find yourself with less of what you want. Treat your business like a child who needs guidance to become a thriving adult, and revenue, profits, and ultimate value will come as a by-product.

_____________________________________________________________________________

If any of this resonates with you, I would encourage you to take our Sellability Assessment and talk with us to see if your business makes the cut as one who can still command a great exit in this M&A environment.

Click here to take our Sellability Assessment. We'll be in touch quickly to discuss the results.

‍‍About GaP Business Advisors

Gilbert & Pardue Business Advisors (GaP) is a Houston-based business advisory firm serving lower middle market and small business owners from coast to coast through representation for Mergers & Acquisitions (M&A) and through business value-growth services such as Fractional CFO, Advisory Board, Executive Coaching, and Consulting.

Matt Gilbert and Bret Pardue established GaP to provide owners of lower middle market and small businesses – those businesses generally enjoying annual revenue of $5-$75 million – with the quality of M&A representation and value-enhancement services previously only available to middle, upper middle, and large businesses. GaP brings highly-experienced executives, sophisticated financial and marketing products, proven-effective processes, and fully-integrated expertise to every engagement. No other M&A firm serving the lower middle and middle markets provides the quality of representation and transactional expertise that we do.

Join hundreds of other business leaders and owners who are in the know. You can choose to receive our monthly newsletter featuring insights in the lower middle and middle market sectors and/or our weekly email blast filled with educational content aimed at helping business owners plan and navigate successful exits.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form

Your information will not be shared with others, and you can unsubscribe at any time.