It’s always struck me that there is an assumption made by business owners, and especially by those who advise them: that the objective of owning a business is to eventually sell.
As a consequence, lots of business advice to financial advice companies is focused around how to increase fee income, or how to increase profits.
For many owners, however, what their business does carries at least equal and often greater importance.
This is especially true when the time comes for the owner to consider moving on. They would like to release some equity, perhaps, but they want to do so in a way that sees the company continue – to leave a legacy.
Someone once told me that the owner of the business is often the one person who is holding it back.
As a former IFA practice owner myself, I look back and realise that, while I bristled at this suggestion at the time, it did contain more than a grain of truth. Although many owners will say they empower their employees, the reality that I see is often quite different.
In my work with business owners working towards sale to an Employee Ownership Trust (EOT) I do see many of them struggling with letting go of control. The influence that they hold over the business is often far greater than they realise.
For such owners, the business defines them. They are extremely proud of what they have built, and the purpose that the business serves.
In order for an owner to feel able to let go, therefore, it is key to ensure that the purpose of the business is clearly identified and communicated.
In our online Eternal Business Programme, we refer to this as the ‘Flag’. It is the flag in the ground around which everyone gathers; the flag at the front of the army as it charges into battle.
Only once an owner feels that the purpose is truly embedded into the business – that they don’t need to be there to keep an eye on the way things are done – will they begin to feel able to let go.
For many, this is even more important than maximising the price on sale.
Identifying the flag
In my experience, many founders find it difficult to describe their vision.
For example, when I ask financial advisers for the purpose of the business, they will typically tell me that they provide transparency of fees, or that they offer financial advice not linked to product, or that they have high client satisfaction.
Some do go deeper, and talk about helping clients to live the life that they want. This certainly does feel purposeful.
It is, however, the same thing that lots of other firms say.
The question, therefore, is this: why would a client or an employee come to your firm rather than the one down the road?
Identifying your flag
If you try to appeal to everyone, you end up appealing it to no one. I do feel that a really strong flag is one that some people will not like.
Try this exercise. Suppose a client sent in some feedback about what the advice of your firm had enabled them to achieve.
What would be the one thing that a client might say that would truly make you punch the air with delight? That would make you share it with everybody else in the office and maybe even your family as you’ve beam with pride?
I’m guessing it probably wouldn’t be: beating investment benchmarks; reducing the charges of their investment products; or simplifying their pensions.
So what would give you the biggest thrill? Maybe even make you well up with a tear or two with the realisation that you had helped a client to do something that really mattered to them – and to you.
Alignment of purpose
Once you start to identify a highly targeted and focused purpose, the next stage is to communicate this clearly to clients and to employees.
Remember, the flag is designed to attract people to you. You want clients to share your beliefs, but you also want employees who share in those beliefs.
Communicating the flag to clients in your marketing is key. So is allowing employees to have a voice in how the flag lives and breathes within the business.
If this can be achieved, then owners will feel much more comfortable in genuinely letting go of control – and thereby get closer to allowing the business to continue beyond them.