Teach. Demand. Demonstrate.
A Super Bowl–winning NFL coach once said that coaching comes down to two things: teach and demand. You teach your players (or in business, your employees) and then demand that they do things the right way.
A coach, owner, or manager can’t do the work others should be doing (on their own)—you must get them to do it, and to do it well. But here’s the difference: a business owner can often demonstrate what needs to be done, while a football coach can’t show every position player how to play. That’s why teams have specialty coaches; in business, the owner or their leadership team can be a specialty coach to many of your employees.
The Bottleneck Problem
Situation:
A past client called with a complaint: sales were strong, but profits lagged. We did the usual—focus groups with most of the 50 employees, interviews with the management team, and time with the owner. The verdict was unanimous: the owner was the bottleneck. Every decision crossed his desk. He was slow to act and traveled often.
Intervention:
We trained him on delegation and worked alongside him to make sure it stuck. A few months later his only complaint was that employees said, “You’ve delegated so much, we’re swamped.” My advice: train them to delegate as well.
Result:
Within one year, profits quintupled.
Sounds easy, doesn’t it? It’s not. I’ve struggled with it myself—with my daughter working alongside me. It’s tough to say, “Do the next thing on the list and get back to me,” without peeking over her shoulder.
This demonstrates this article title because it really means, the less the owner does (working in the business) the more they have (profits, higher value, etc.).
Why It Matters for Increasing Value and Exiting
Over the past year, I’ve been on at least three dozen podcasts and hosted just as many guests. When we discuss increasing business value, reducing owner dependency is at the top of everyone’s list. Without it, selling or transitioning a business becomes harder, riskier, and often less profitable.
This isn’t a step-by-step manual on letting go, but here’s a simple framework. If you need a coach to keep you on track, give us a call. If you need a fractional C-level person to come in a revamp things, get hold of OneAccord.
- Look at Your Business Like a Buyer
Do a mock due diligence—ideally have an independent third party do it. We all see our businesses through rose-colored glasses. Buyers won’t. Expect rigorous due diligence, even for lower-middle-market deals. Diligence has exploded over the last 10-15 years and as my friend Brian Quint, who sold the 60-year-old family business Aqua Quip to private equity, said, “Expect a financial colonoscopy.” I’ll add, expect the same level of scrutiny on customers, employees, operations, marketing, and all other aspects of the business.
- List and Rank Your Tasks
Write down everything you do daily and monthly. Rank by importance and complexity. Shed tasks from the bottom up, starting small, then expanding as your team proves capable. As you start discarding tasks from the bottom eventually you won’t be doing much if anything below your pay grade.
- Train, Monitor, and Reinforce
Delegation isn’t “just get it done.” You must train, check progress, and reinforce standards. Mistakes will happen—monitor and be patient.
Curt was the poster child for someone who didn’t get delegating. He was the only one who could program certain machines and when asked why he didn’t train others to do it his answer was, “It takes me 20 minutes to do it, and it will take me one to two hours to train them.” So, he put in his 20-minute blocks of time multiple times a week while a handful of employees waited.
- Create a Culture of Advancement
Top employees want career growth. If they can’t find it with you, they’ll go elsewhere, leaving you with “B” players—and as former Secretary of Defense Donald Rumsfeld said: “A’s hire A’s. B’s hire C’s. Find some “A’s” and try to be around them.”
- Focus on Growth
Buyers want growth—sales, profits, or both. Growth fuels engagement, retention, and value. They do not want a stagnant business. Good employees also want growth because growth leads to bonuses and career advancement. They want their ideas listened to and implemented. Here’s a good example of this.
I recently heard a friend speak to a group I’m in and as he gave a quick outline of his background he mentioned a company run by a husband and wife who constantly fought. He was stuck in the middle and realized this was not his future, so he left. He eventually bought a business and grew it from $5 to $50 million in sales. That employer didn’t know what they lost.
- Track What Matters
Rely on accurate financials, KPIs, and management reports—management by checkbook doesn’t work (there’s money in the bank so things must be good).
A Situation to Avoid
“Nobody is going to buy your business.”
That’s the opening line of If They Can Sell Pet Rocks, Why Can’t You Sell Your Business (For What You Want?)—and it’s more common than you think.
George learned this the hard way. He ignored any type of KPIs or metrics, and his balance sheet was underwater. The good news was it was fixable. The first step was to get George to pay more attention to the business not his hobby, of training horses. We put in a marketing plan, paid attention to sales, and within six months they were 33% above projections. After 12 months George had two offers to buy the business and he turned down both because now it was fun, and profitable.
You must pay attention to the details, like George ultimately did because the result was five years later one of the buyers came back with a substantially larger offer, which was accepted.
The Ultimate Goal
Every business will exit—planned or unplanned. The two universal drivers of a successful transition are growth and profits.
- Outside buyers pay more for growth, profits, and solid value drivers—raising both your multiple and your earnings.
- Internal buyers (like managers or family) tend to be more risk-averse; strong performance lowers perceived risk.
- Banks and investors love growth and profitability.
- ESOPs require a strong management team, or the owner will have to stay longer than planned.
Know What You’re Selling—And for How Much
I once had a client tell me her business was worth twice annual sales. Why? Because “that’s what I heard.” I asked: if a competitor has the same sales but no profits, are both businesses worth the same? She instantly understood the flaw in her thinking as she was making 15% net profit.
Most businesses sell based on earnings, not revenue. It’s why all the value drivers Nick and I mention in our articles and on our joint podcasts are so important. The more value drivers you have under control, the higher your earnings and your multiple. Reducing owner dependency is one of the most critical drivers—and often the first one to tackle.