There are many ways to evaluate how successful your business is, but none more decisive than whether or not someone would want to buy your company.
Every business eventually sells or dies. If you are thinking about selling your business, perhaps now or perhaps in 10 years, you need to make sure you are creating an asset that someone else will want to buy — otherwise, you have a job instead of business that can exist independently from you.
So here are eight ways to think about the difference, to ensure you are building a company, and not just doing a complicated job:
(1) When you have a job, you show up at work to earn money. A strong company generates revenue whether you are there or not.
(2) A job is a place where your personal reputation massively impacts your results. A strong company is a place where the brand is more important than the personality of the founder(s).
(3) A job involves you using your personal experience and expertise to get a result. A strong company relies on processes and systems that can be managed and executed by different people to consistently produce desirable results.
(4) Do most of your customers have your cellphone number? Then there is a big possibility you have a job, not a business. The more your customers depend on you personally, the harder it is to grow and develop your business.
(5) In a job, you will get fired if you go on vacation too much, because your value comes from actually being there to work. But if you own a company, the ability to take vacations without hurting your company’s performance makes your business far more valuable.
(6) Being in business means that your success comes from serving customers well. But if you are so reliant on a single customer that they can dictate how you deliver your product or service, your company is more like a job than a valuable business. A job is always dependent on one very important customer — the employer. A strong business thrives by not being overly reliant on a particular customer.
(7) With a job, it’s up to you to solve problems. With a business, your employees should solve most problems.
(8) In a job, you can earn more money by working harder. If you are running a business, you earn more money by using resources more efficiently. Business owners seek profits — they save or borrow saved money, hire workers, and buy or rent raw materials, land and capital. They then produce goods and services that are sold at a profit or at a loss. A profit means that the business owner used those resources wisely to serve customers, and a loss is a signal from customers that there were other uses for those resources that would have been better. If your rewards are based on working harder instead of working smarter, your business is more like a job.
If you are looking to sell your business now or in the distant future, it’s important to start looking at your business the way a potential buyer would see it. This will help you focus building your business above and beyond doing a job.
To get started on this, you can can sit down for a free consultation with the MAXIMA Group . We focus on privately held companies with annual revenues of $3 million to $60 million. We also advise larger public and private companies on buy-side engagements. We can offer insights about how your business is performing relative to others in the industry, how attractive it would be to potential buyers, and where you could improve the value of your company with a solid exit strategy.