Passive Ownership! My Cake And Eat It Too!


One of the options a business owner has to exit their business is to use a Passive Ownership Method.  This allows the business owner to stick around and be involved with the business, but to step away in the daily running of the business.  When done correctly and with planning in advance the owner is fundamentally self-sustaining and does not have to head up the company.  The owner is there to overlook the financial part of the company, much like a mentor. Key people are the self-sustaining element.

Divulge the culture values; sharing the same values as you, and what formed your foundation.  By communicating with your employees what you did in all the areas of growing your business, they will feel a part of it and continue with the same traditions, habits, and ideas which became the business owner’s foundation of success.  This will build a good foundation which will allow the business owner to delegate more of the tasks to others, allowing a self-sustaining company, with a growing management team.  This is the framework that attracts investors to the company, knowing that the traditions and the culture can continue.

Improve cash flow; By increasing cash flow, you create options and markets to buy your business.  For the outside investor, they see a cash flow that will continue without the owner, for the inside buyer, they have the cash flow to purchase the business owner out and complete the purchase of the business over time.  For the passive owner, a good cash flow allows the business to sustain itself, as you enjoy the role of a passive owner; taking out a good salary, paying the key people good salaries, and enjoying life by being a passive owner.  So, how do you create and improve cash flow.  The best way is move cash flow up to the front of the line as a priority.  Having cash flow meetings weekly with your management team will help you with the ideas you need to either increase cash flow through sales, or through expenses attrition. In any event by putting this topic in the front and getting feedback from your management team regularly, you will be able to come up with great ideas to increase cash flow and profits. 

Backing away and delegate major duties; Start getting yourself out of the role you are playing which is to be involved with all the decisions.   You need to stop doing the things that occur daily.  Start delegating to the people who can do the job better than you.  By listing all of the duties you put your hands on, identifying them, and then measuring as how effective are you at them (being honest with yourself), you can then hand the job off to someone else who will do them better.  Overtime, you will eliminate much of what you thought you had to do, to people who are doing them better and faster.  By doing this it will make your company less dependent on you.  You also will relieve yourself from the tasks, and duties which zap energy out of your life.

Take More Time Off:  this could be a tough change!   Learn how to take time off from your business.  Its taking time off and learning how to live outside your business life, create new hobbies, new friends, and new habits. Learning how not to be on a schedule.  This is easier said than done.  However, few business owners think or plan about the time when they don’t have to put all their energy into work or when they retire.  One way to do this is to make a list of all the things you wish to do outside of your business career.  Start planning them now, start testing the time off.  There are many business owners who retired, only to find that after a period of time, they were totally bored, longing to get back to work.  They didn’t prepare, nor did they find something to get excited about.

By doing the above you will create a business that will be on a growth mode.  Investors are looking for growth mode companies.  Knowing you have a good management in place, a culture, good cash flow, and owners that are ready to exit the business is a great recipe for receiving top dollar for their business when the time comes.




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