If you ask any business owner why they started their business, you are bound to get some flavor of, “I wanted more control over my life,” or “I wanted to be financially independent.”
While these are fantastic reasons to start your own business, the reality of the situation is that most business owners, eager to grow their businesses and make a future for themselves, end up in a different place than they originally expected, losing sight of that control and independence. They often end up getting overly involved in working “for” the business and become its key asset to sustainability.
Business self-sustainability should be a goal of every business owner, whether your business is large or small, no matter what industry you are in. There are many key benefits to running a self-sustainable business. Here are the top four:
Self Sustaining Businesses Are Worth More
If your goal is to build your business and one day sell it, know that businesses that are owner-operated traditionally net a lower sale price than businesses that are absentee-owned.
Why is this? It’s simple economics. A potential buyer isn’t buying your company because they think you are great. They are buying your company because they want cash flow. If the business survives only with you being in it, working for the business, buying your company would require more effort on their part. They will have to find somebody to replace you and/or get involved in the day to day operations of your business. And they probably don’t want that.
This added effort on their part makes the purchase less attractive and they, therefore, will offer you less money for your company. Designing your business to be self-sustaining takes this obstacle off the table, making your organization more attractive to buyers and ultimately getting you a higher price for your business.
Self Sustainability Decreases Risk To The Business
Another advantage to having a self-sustainable business is the lower overall risk it poses to your business’ success. If you run a business, and the majority of its survival and day to day operations depend directly on you, what happens if suddenly you were no longer there? What if you were to get in a horrible car accident on the way to work and were in the hospital for an extended period of time? How would your business continue?
Of course, nobody wants to think of horrible scenarios such as a tragic car accident, but it is something that should be considered. If your business cannot survive without you in it, you are putting your employees and their family’s lives in potential risk. How would they continue to be gainfully employed in a company that can’t function because you physically cannot go to work?
Even more realistically, what about when you need to secure additional funding? The fact of the matter is that banks and investors are much more comfortable with and willing to get into business with companies that have evolved beyond the owner-operator stage. Putting the time in to become self-sustainable will work to your advantage when you are ready to expand and need a loan or are looking to take on investors.
Self Sustainability Turns Your Business Into An Annuity
What if you have no intention of selling your business? If you are in this category, developing a self-sustaining business model is actually even more important.
The truth is even if you love working, you cannot work forever. Eventually, there comes a time in all our lives when we want to slow down, enjoy the life we’ve built and enter retirement. The problem with this is if your business isn’t self-sustainable, and you don’t sell it, it can’t survive. Without you doing the work to make the money, the business, and the money, dries up.
A self-sustainable business can easily become an annuity for you when you retire. You can be the hands-off owner, enjoying the cash flow the business brings you and essentially treating it just like another investment in your portfolio.
Self Sustainability Frees You From Your Business
Looping back to the reasons you started your company in the first place, one of the most important reasons to consider setting your business up to be self-sustainable is personal freedom. You started your business because you wanted to be your own boss and have more control over your life. Why would you stay stuck in the position of feeling like you are a slave to your company?
Creating a self-sustainable business allows you to take a step away when you want to, while your business does what it does every day, unaffected by your absence.