Great Small Business Owners Know How to Take From Their Business
It's about sacrifice. Everyone knows that.
Being a successful small business owner is about working harder, longer and smarter than everyone else. You have to give, give, give.
And then, if you do that, over and over and over . . . you get the payoff.
Sacrifice leads to payoff. . . but what if it doesn’t work that way?
What if payoff only comes to those owners who have already taken it?
My Mistake Was Only Giving
I worked incredibly hard for 10 years building a small business, and thought that meant I was supposed to sacrifice and give. Viewing myself as a servant leader, I would prioritize the needs of others instead of myself. I saw my role as one of giving support, opportunity and resources to help others do their jobs. That seems like noble sentiment doesn't it? I still believe that's how leadership is supposed to be, and it worked. My work, and the work of the team, grew the business to 50 full-time employees. The problem was that giving was exclusionary for me. I just gave. I never took.
- My salary sucked.
- Benefits were scarce.
- I worked uncounted uncompensated hours.
- Working was a constant act of suffering.
My noble, unselfish purpose should have protected me right? The truth is my nobility was flawed. It wasn't quite as unselfish as it seemed because it was secretly fueled by an hidden, internal, ultimately faulty belief. As I endured all these struggles, I did so believing that I was going to get paid off for that sacrifice. I thought I was investing in the future where my return would be exponential. I believed that I was suffering now, but when I was ready, I could sell the business and collect my massive reward.
I wasn't taking now because I thought my buyer would give me my reward then. Strangely, I was to learn that business buyer's are the ones who expect a reward for buying a business.
Results are What's Already In Your Belly
When I first explored selling my business, I learned cruelly fast that actual, tangible, kept and consumed results are what buyers are willing to pay for. I would talk with a business broker and would be asked:
How much profit did you make the last three years?
How much salary did you take the last three years?
I would answer those questions honestly - and find the broker couldn't get off the phone fast enough. From an outsiders perspective, I was running a successful business, but the truth behind the curtain reality was more fragile than that. When they actually looked at my business results, the brokers realized I had never really taken a bite.
Not a single one.
And they knew buyers were way hungrier than that.
Take Your Bite
At some point, if you're serious about surviving as a business owner, or if you ever want to see some tangible pay-back for your investment, you need to stop and say . . .
It's my turn. Feed me.
First, let me state the obvious: you can't take what your business doesn't have to give.
You're burning through your nest-egg, not showing a profit, but still taking a salary of $150,000?
Yep, she was. And she thought she was worth it even as her two-year-old, small company crumbled around her. This is not what I'm advocating for.
Taking more than the business can give is stupid, but I learned it's equally as stupid to believe that you can suffer your way to a jackpot. You have to take bites when you can. Your business is never going to volunteer to give back to you. In fact, it's going to get more and more demanding of your time, money and energy as it grows. It will take all you give and still demand something else. There will always be 100 open mouths crying out for that spoonful you are considering for yourself. Swallow it anyways.
Take Enough to Be Desirable
Hey! Mr. Small Business Buyer. Look over here.
See the income my business generates for me.
Check out the perks of ownership.
I've had these for years.
Wouldn't you like these?
They can be yours for this price.
(This is how you entice a buyer).
If you dream of a successful exit, everything else aside, your results must be desirable! By results, I mean what you've already, actually allowed yourself to consume. Not what simply survived long enough to hit a monthly profit number.
We made a lot of money last year but reinvested it back into the business.
That doesn't count. You need to actually take from your business in retained profit, salary or some other sort of document-able owner's benefit. That track record of taking, that proof of your business' ability to give to you, is what buyers buy.
You Are More Important
I still believe in servant leadership, but I learned the hard way that a business has only one irreplaceable asset.
It's not your employees - you can hire more.
It's not your clients - you can find more.
Secret formulas, ideas or competitive advantages . . . these things come and go.
The truly irreplaceable asset your business has is you. When that's gone, burnt up, ready to leave . . . the business is done, so . . .
Keep Giving but Also Take
Give to the business.
Grow the business.
Sacrifice, reinvest and work your ass off.
That's all good stuff, when it happens at the right time, for the right reason.
And then, when that work starts to pay off, you need to take.
Taking is the only way you set the stage for your payoff.
But that Makes Me Feel Selfish
Once I understood how a buyer was actually going to approach my business, I realized I had to change my eating habits. Taking was the only way I was ever going to create a business someone else would see as valuable.
But when I started taking money out of the business, I felt like I was selling my business and employees short.
If I believed in what we were doing, I should continue maximizing the investment, Right? Why wasn't I buying the new equipment, or raising wages more, or giving a better bonus, instead of increasing my salary? In a word: guilt.
Some of you won't understand that feeling, but it was very real for me (and I know for others). Nevertheless, I kept taking. Not excessively, but appropriate to my work, sacrifice, goals for the future, and business results.
It worked. Ultimately I built a track record of taking that allowed me to successfully sell the business.
Work hard, sacrifice, but remember a payoff only comes to those small business owners who have already taken it.