My 'check engine' light is on … Is that important?
As silly as it seems, sometimes we ignore the obvious warning signals in our lives. For example, a young man ignored the “check engine” warning light on the dash of his new used car. He delayed going to the auto shop one day too long. Suddenly things got disastrously warm under the hood. The prior week, he didn’t understand and ignored a confusing email from the insurance company about the policy on said car. Just two little things. Taken separately, the two warning lights seem like innocuous “yucky life stuff.” When joined together, it made for a sad situation and very, very expensive life lesson.
How many of these “yucky life stuff” signals do we see and ignore every day in our businesses? My guess is the answer is plenty — it’s likely far more than we realize or would want to admit. As business leaders, we’re busy. Business owners are even more so. We are consumed with what we have to do — to get the next sale, the order out the door, the cash in the door — so much so that we miss the signals that important things need attention.
It can be easy to rationalize or ignore the signs. Cash is tight because that’s just the way our biggest client treats us. Employees leave us because, well, he was a slacker anyway. We can’t do anything about sales and pricing because it’s so competitive out there. Profits suck because of this, that, or the other thing. Bugger, I’m late for that meeting!
Meanwhile, the business is left to its own inertia. It may be a diamond in the rough or it might be lump of coal. The value of the business is left to chance. When it comes time to transition the business to the next party, it may or may not hold interest to a buyer or member of the family.
There are steps you can take to avoid this though, including:
- Recognizing that your business is and should always be viewed as being for sale, even if it is a given that it will go to the next generation.
- Building systems to help you identify and monitor the warning lights important to your business, and doing so on a consistent and regular basis.
- Critically analyzing your business as an objective buyer would. Set emotion aside. Would you invest in or buy your business knowing what you know? What is driving its value? What is damaging its value? Do you know?
- Committing to working on those things that grow the value of the business and make it an attractive investment for someone else. After all, it is likely your biggest asset. Ideally, you’d like to convert it to cash someday and/or take pride in passing the kids a business they want.
- Putting together a team of outside advisors to help you. Bring them together to share what’s on your mind. Tell them to work together to bring you the best solutions. Ask them to hold you accountable to working on your business, not just in it.
The young man in our story learned the hard way that it’s important to take care of the engine that runs the car. No doubt next time he’ll pull over and work on the vehicle that gets him where he needs to go. The question is, will you?
Martha L. Sullivan is a partner and succession planning practice leader for Honkamp Krueger & Co. PC.
Click here to sign up for the free IB ezine — your twice-weekly resource for local business news, analysis, voices, and the names you need to know. If you are not already a subscriber to In Business magazine, be sure to sign up for our monthly print edition here.