Don't make firm dependent on owner
By Barry Flynn
The Orlando Sentinel
The biggest threat to both your small business's long-term survival and its sale value when you move on may be someone you would never suspect: you.
If you're a conscientious owner who works hard, knows every customer and attends to the tiniest detail, you may be making yourself the indispensable man or woman.
And nothing functions when an indispensable part is missing.
So vacations, a case of the flu, even the occasional day off all become crises.
As for cashing out at retirement — or earlier — forget it. Who wants to buy a business when the key employee — the person with the customer relationships, the technological know-how and the hands-on experience that make it run — is going to walk out the door the minute the deal closes?
The small-business owner who does everything is more like an employee than an owner, said Michael E. Gerber, author of "The E-Myth Revisited" (1995, HarperCollins, $16) and other books. The title refers to Gerber's belief that most small businesses are not really entrepreneurial.
"What you've got is a job for someone who's absolutely determined to stay there," said Gerber, who runs a Santa Rosa, Calif., business consultancy.
Owners often get diverted from the entrepreneurial path by day-to-day demands of operating, he said.
What's wrong with that?
For one thing, the business does not function in the long run as well as it might. For another, the demands on the owner never end.
"Let's say you're running this business and you or your spouse gets hit by a car," said Susan Carter, a Minneapolis business consultant and writer. "Can you run it from a hospital bed? Can you take a one-week vacation? You're just increasing your risk" by being indispensable.
Carter's book, "How to Make Your Business Run Without You" (1999, Nasus Publishing, $38), addresses the problem and says the risk of failure is the primary reason every small business must become less dependent on the owner.
The short-term risk is this: If you spend all your time doing the basic work of your company, you don't have time to plan, to fine-tune your business and figure out where you need to be in the future.
In addition to the long-term planning, a company that is sufficiently organized to run by itself gets more efficient and profitable, Carter said.
The ultimate advantage, of course, is that the owner gets to spend less time working.
The key to all this is a system that can be a business's guide, said Carter, who takes her inspiration from the franchise industry.
"With a system, you need fewer people but they're working at higher efficiency and higher productivity," Carter said.
Take J.D. Cochran, a retired Navy chief who bought an independent auto-repair business in Orlando, Fla., 14 years ago and called on his experience during 26 years in the military to develop systems.
"My plan going in was not to work every day," Cochran said. "I wanted to build the business up and then hire the proper people to work my system. That was the goal all along."
It didn't work out that way at first, he said. He, his wife and one hired mechanic were the only employees. When he bought it, there was no operating system at the company he now calls Ice Cold Auto Air Muffler City.
"We had a five-year plan. But that five-year plan took about 10 or 12 years to get in place," he said.
Now, there is a system for doing everything. That includes greeting customers with the same "spiel," performing diagnostic tests in front of the garage so customers can see exactly what is being done to their cars and recording the details of every job on computer so Cochran knows exactly how the business is doing at any moment.
Cochran thinks getting good employees who make the system work is crucial.
"I've got key people in key places," Cochran said. "And that's what affords me to be off and play golf two or three days a week."
