If your business is dependent upon you, you don't have a business you can sell. I'm Dave Lorenzo, this is the Inside BS Show. A business that is dependent upon the leader of the business, the owner of the business, is not a business that can be sold.

I'm gonna share with you three things you need to do right now, today, in order to make sure your business isn't key person dependent. You, as the business owner, need to transition your business from a day-to-day job into a business that provides opportunity for other people, and then transition that business into an investment for you as the owner. In order to do this, three things need to happen.

Number one, you need to have a leadership team in place that can create an environment of continuous improvement, and this means bringing on people who can help grow the business, help improve the people in the business, and make sure there's a succession plan in place. Number two, you need to have systems and processes for everything, from replacing the toner in the printer all the way up to delivering your products and services. And then, number three, you need to have contingency plans in place, you need to have everyone cross-trained so that people can fill in for other people, and there's redundancy built into your business as a whole.

Let's take each of these three things. Number one, leadership. Most businesses, when the owner starts them, and you hire people to work in your business, you hire managers, you don't hire leaders.

You hire people who have specific skills, knowledge, and experience, and you don't think about people who can help you grow the talent in your organization. That's not gonna work if you want to sell your business. Everyone in your organization who has a leadership role needs to be a true leader, they need to be able to develop people, they need to help people advance and grow into the next opportunity that will present itself in the business.

They need to be able to solve problems, they need to be able to think on their feet, and then they also need to be able to handle the management aspects of the work that they're going to do. This means that they need to be able to run the systems and processes, they need to be able to set up the systems and processes. So, you're a small business right now, you're doing a million dollars in annual revenue, your number two person needs to be able to do everything to run that business.

And then once you go from one million to two million, you can probably hire someone to oversee operations while you oversee strategy and your number two person oversees sales. Then you go to three million dollars and you hire a specific salesperson. And then you have a sales leader, you have an operations leader, and you have you as the person who oversees the business strategy.

Your sales leader is bringing in layers underneath them, they're bringing in sales supervisors, they're bringing in inside salespeople and outside salespeople. Your operations team may have shift managers who are working the different shifts. These folks need to be able to develop other people as well as develop systems and processes.

So, the first thing you need to do to prepare your business, whether it's going to be sold 20 years from now or 20 months from now, is make sure you have leaders in place who can develop people as well as systems and processes. And that's part two. The systems and processes are critical.

People should be able to walk into your business and take over from day one. And they should be able to take over because there should be a manual that has all of your standard operating procedures with your systems, with your best practices, with your processes all laid out. There should be job descriptions for each role laid out.

The responsibilities for the people in those roles should be clear. There should be accountability. There should be regular reviews that make sure people are performing up to the minimum standards, the minimum expectations of their role.

Systems and processes are what determine this. They are also what determines the value and the sellability of your business. And then the third element is contingency planning or redundancy.

So, succession planning is all about having someone ready to take over the role when the next person moves on. So, let's say the CEO decides to move on. The chief operating officer's gonna take over for the CEO.

Somebody needs to take over for the chief operating officer. That's a succession plan. Contingency planning is if the person who takes care of the press in the warehouse is out, you have two people who know how to run that press so that production doesn't stop, doesn't slow down if somebody gets sick or if somebody needs to take a week off or if somebody goes on vacation.

So, having redundancy for every role, that's called contingency planning and that also makes your business more sellable. A point that is essential for us to make here is with the leader, having this layer of other leaders in place, you as the owner, if the business can run without you, if you were to step out of it for a month, your business is sellable if it's profitable and not dependent upon you. If you want to get maximum value for your business, then the entire business needs to be able to run without you forever.

So, maybe you need to hire a CEO to replace yourself and then you just become the owner who drops in on occasion. If that happens, you might not want to sell the business at all because the business may be throwing off so much cash, it may be so valuable to you and it is able to run without you that you just come as chairman of the board and run a board meeting once a month or run a board meeting once a quarter. This would be the ultimate way to value the business because that business could be sold at any time and that business could be sold for a premium.

If you're looking to sell your business, these three things, making the business not dependent on you as the owner, having other people on the leadership team who can run the business on a day-to-day basis, having systems and processes so everybody can look at each task in the business and run those tasks on their own and then having contingency plans in place so if people call in sick, people go on vacation, those tasks can be done. Those three things are the bare minimum in order to sell the business and to get what is market value for the business. This is the basics.

If you're in leadership, this is the first thing you should work on. When people call us and tell us, hey Dave, I wanna sell my business in a year, I wanna sell my business in 18 months, these three things are the first three things we look at in order to determine if the business is sellable at all and how to make the business sellable in the shortest period of time. I'm Dave Lorenzo, this is the Inside BS Show.

We'll be back here again tomorrow with another edition of our show. Until then, here's hoping you make a great living and live a great life.