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Your business is too dependent on you. That's right. Your business is too dependent on you.
We're going to focus on how you can change that and four things you can do to make a difference in this area. If you're interested in selling your business, either now or in the next five years, you've got to listen to this edition of the inside BS show. Hey, now it's Dave Lorenzo.
I'm the Godfather of growth, and this is the inside BS show. We are here every day with you taking you inside business strategy, sharing all the insider business secrets with you today. We're talking about owner dependence and how you can break free of it.
Your business is too dependent on you right now for you to be able to sell it. I don't care if you're doing $20 million or $200,000. There's a pretty good chance that you have built your business around things that you're really good at that you're not delegating to others.
So there's three things that we're going to talk about today that you need to focus on. If you want the business to be independent of you, the number one reason your business should be independent of you is so that you have something that you can sell a business that requires you to be a part of it is not a business that's sellable. You're never going to be able to sell this to somebody else because they don't want to buy you.
People who are buying a business are buying future income, future revenue, future profit, and if the business requires you to be there, that future profit is at risk and it's not as valuable as future profit that just happens, that just shows up without you being present. So the first thing you need to do in order to reduce owner dependence, reduce the dependence on you is think about the decision making that takes place in the business and you should empower the people who are leaders in your business to make decisions. So here's how you do that.
You identify people who are comfortable taking risks within the guidelines that you set and once you identify these people, you share with them your philosophy for decision making and you empower them giving them the guide and the limit that they have. So for example, when I was the general manager of a hotel, we allowed anyone, a housekeeper, a front desk clerk, a bellman to solve a guest's problem. If solving that problem required $100 or less.
So in other words, if the guest had a sandwich in the restaurant and they were not happy with the sandwich and they complained about the sandwich, the first option for the server would be, can I make you a brand new sandwich so that you can get what you wanted when you came here? And if the guest said no, and even if the guest had eaten the entire sandwich and they said, I'm not happy with the sandwich, it was only $20 the server could say, would it be okay if I just take it off your bill? And you know, I, if you weren't happy with it, I don't want you to pay for it. No questions asked. I'll just take it off your bill.
That every server had the ability to do that up to a hundred dollars. They could comp anything that they needed to. So a bellman could do that for a guest if the guest had a bad experience or if the housekeeper, for example, threw away the guests razor, they could go to the store and buy another razor.
We could send someone to the store to buy another razor for 20 or $25. So that was the guidelines that we gave with you in your business. You're going to empower your leadership within certain guidelines.
And I encourage you to think about different scenarios and write out the guidelines so that these people can become familiar with your risk tolerance. You should discuss worst case scenarios with them and plan for contingencies related to the decisions they're going to have to make. And then you should adopt a philosophy that it's better to make bad decisions fast and fix them than to make good decisions in a really protracted, a really slow, long way.
The second area that you should focus on to remove ownership dependence is leadership communication. Your business probably centers all of the communication around you and it makes sense because when you started the business, you were acquired to do all the communicating with the people so that they knew what the business was about. I want you to create a 30 day calendar with a 30 day calendar.
A basic activity for each day of the month and you assign the heads of each department to cover that basic for that day across the entire business. So for example, if on the first of the month, the daily basic is always say thank you to guests after they purchased something by writing a handwritten note, calling them on the phone and sending them a thank you email. We thank people in three ways for working with us and after every purchase, everybody, every department does that.
The reason is because we want guests to feel like we're grateful that they help us by spending their money with us. Then every first of the month you cover that basic. So 12 times a year everyone in every department knows that we thank each guest in three different ways when they purchase something from us.
So the accounting department knows that. So if they're on the phone with the client and the client has a complaint about a bill, they resolve the complaint. And at the end of the call, the accounting clerk says, and Mr. Smith, I just want you to know that I personally am very grateful that you do business with X, Y, Z company.
And then they send a note. I'm glad I could resolve your problem today. If you need anything else, you can call me personally.
And again, thank you so much for doing business with us. And they write a handwritten note. So anyone who ever talks to a client, every time you talk to them, you say thank you.
And you're appreciative for the work that they're doing with you and you're appreciative for the work that they've given you. That's a daily basic that's covered on the first of the month in every standup meeting, every department meeting. The second communication focus you should have is a growth focus for your entire company for every day of the month.
So you cover a daily basic, a foundational item like gratitude. You also cover a growth item. So the growth item could be invite a family or a friend to use one of our products.
And this is covered in your daily standup meetings with all of your departments. So that everyone in every department, even if they're a behind the scenes department is inviting friends to work with your company. The third element of leadership communication is a compliance or a safety topic that's covered every day.
So you're conducting these standup meetings every day. And the safety element could be something as simple as in manufacturing environments, nobody ever wears open toed shoes. That's covered on the first of the month.
So on the first of the month, you're covering these three things. On the second of the month, you're covering three different things. So every day of the month is assigned three tips that have to be covered in the standup meeting, the daily basic, the growth focus and the compliance or safety item.
You then delegate this once you've created the calendar and you've written out all of these points, you've delegated running each of these standup meetings in each department to a member of the team for the entire month. So 12 different people in each department run the standup meeting each month. The reason for that is because then communication is not dependent on the leaders.
Communication is part of the team's responsibility. The third element of reducing ownership dependence is very tactical. You as the owner have a handful of things.
It should only be a handful of things that you're responsible for that you have to do personally. It may be payroll. It may be making bank deposits.
It may be interfacing with a recruiter to find new people. You should pick one of those tasks each month and focus on delegating it to someone else and you should invest an hour a day delegating the tasks that you as the business owner are responsible for to someone else. This is so important and you should have multiple people who can do all the tasks that you're responsible for.
So if you as the owner do payroll, your bookkeeper should be able to do payroll and your operations manager should be able to do payroll and your marketing director should be able to do payroll. Why? Because if you're out and the bookkeeper leaves the company and you need somebody in a pinch to do payroll on Friday, the marketing head can do payroll because they've cross trained on it and they've learned it. So your tasks as an owner should also be cross trained to other people each month.
These are the things that you can focus on on a daily basis to make your business less owner dependent and that's going to make your business more sellable down the road when you're ready to sell. My name is Dave Lorenzo. I'm the Godfather of growth and this is the inside BS show.
We'll be back here tomorrow with another edition of our show. Until then, here's hoping you make a great living and live a great life.