Demote Yourself as MVP – The More Valuable the Owner, the Less Valuable the Company
At Pursant, we love working with owners who have invested heart and soul in their businesses. Devotion and determination go hand in hand with passion—a key ingredient in the success of any enterprise.
More often than not, these same hardworking business owners expect the value of their businesses to be proportional to the time and effort they have invested in them. This mindset can frequently lead to disappointment. To an enterprise buyer, value is more about the future than the past—a future without the founder and owner.
That’s right. If you intend to profit from an eventual sale of your business—even if not for years or generations from now—you must start now to step down from your post as company MVP.
Here are the top 4 reasons why:
1. Business Sustainability
To have value, your business must be able to operate without you. If it can’t, chances are you lack a strong management team. What does “strong” mean? It means talented people with the skills and industry insight to fulfill their parts of the operation without your involvement. When assigning a value to a business, buyers will consider the concentration of talent in the owner and the risk associated with that. Now is the time to evaluate the managers with which you surround yourself and make changes as needed.
If you are the MVP, it’s likely your revenue growth has plateaued or is nearing a plateau stage. You are only one person and there are only 24 hours in a day. You will eventually max out. Invest in a team to capably handle operations so that you can work on the business, rather than in the business.
3. Talent Diversity
A great team wins championships, not just one great player. Building a valuable business requires a variety of great managers with complementary strengths. It’s not possible for one person to be MVP at everything. A management team with a diverse skill set can do it better than you. Go find your players and hire them!
4. Your Sanity and Quality of Life
Business owners often start businesses because they want the freedom associated with business ownership. If you are the MVP, you are anything but free; you are handcuffed to your business. If you remove yourself from the MVP strata by building a strong management team, you will find that your stress level will drop and your life balance will return. You will attain focus and a renewed zeal for your business, which can only help in its growth.
Need help demoting yourself from MVP and/or structuring a profitable sale? Our Buy-Side Advisory and Talent Solutions business units work with business owners to build leadership teams and maximize business value.