You Don’t Have to Be Selling to Need a Transferable Business

Making your business transferable can give you more choices while you still own it. You may want to keep the investment, stay involved and enjoy the work. The question is whether the business can carry its value forward when your involvement—or someone else’s—changes.

Consider a fictional owner who has no intention of selling.

The company earns money. The owner likes the customers and wants to keep building it.

But every unusual quote comes back to the owner. Two important customer relationships depend on that person. When a department runs into trouble, people wait for the owner to decide what happens next.

The owner takes a week away and spends part of every day answering calls.

Selling the business isn’t the immediate problem.

Having very few choices about how to own it is.

What would have to keep working?

Transferability concerns whether the business’s ability to create value can continue through a particular change.

That includes the people, knowledge, relationships, systems and judgment that produce its cash flow.

A change could involve new ownership. It could also involve someone else carrying an important role, a key employee leaving, or the owner reducing day-to-day responsibilities.

Those changes require different preparation. A business that can operate through a two-week owner absence hasn’t necessarily demonstrated that it could survive a permanent departure or an ownership transfer.

Start by naming the change you want the business to be capable of handling.

Then ask what needs to continue, who would carry it, what support they would need and what evidence would show that it works.

You can leave a role and keep the investment

Your role in the business and your investment in it are different things.

You might want someone else to run daily operations while you remain an owner. You might keep responsibility for strategic choices while another person handles work you no longer want to do.

Or you may want to stay exactly where you are, with greater confidence that an illness or another disruption wouldn’t leave everyone waiting for you.

None of those choices requires you to put the company up for sale.

They do require preparation for the responsibilities that would change hands.

A title, an organization chart or a procedure can help. The person taking responsibility still needs the authority, information, experience and relationships to do the work.

The useful question is: could the business keep doing what makes it valuable under the arrangement you actually want?

Being involved is different from being indispensable

There can be good reasons for an owner to remain deeply involved.

The goal isn’t to remove you from everything or pretend your judgment has no value.

The problem arises when work you want someone else to carry cannot move without you—or when an essential capability would disappear with you.

In the fictional company, the owner might start by developing another person’s pricing judgment. That could mean reviewing decisions together, explaining why certain jobs are attractive and others are dangerous, and gradually transferring authority within agreed limits.

The customer relationship may take a different kind of work. A colleague needs opportunities to earn trust, understand the customer and demonstrate that the company can deliver without the owner personally handling every issue.

Writing down the process helps preserve knowledge. Watching another person perform it successfully gives you different evidence.

More choices while you still own it

As those capabilities develop, you may gain options.

You might take time away. Change your responsibilities. Give the leadership team room to make decisions. Retain ownership while doing different work.

You may eventually choose an internal transfer, an outside sale or another arrangement. Developing the capability earlier gives you something to evaluate when that decision arrives.

It doesn’t guarantee a buyer, a price, financing or a successful transition. Those depend on the business, the people involved, the terms and the circumstances.

But waiting until you want to leave can leave you trying to develop years of judgment and relationships on a transaction timetable.

Start with one change that matters to you

You don’t need to begin by choosing an exit date.

Begin with a change you would like to make—or one you want the business to be able to withstand.

Ask:

• What would I like to stop doing, reduce or retain?

• What would still need to work if my involvement changed?

• Who could carry those responsibilities, and what are they missing?

• What have we actually tested, rather than assumed?

• Would the business still produce the cash flow needed to support the arrangement?

Those questions help define the work. A fuller diagnosis can establish where the important dependencies, risks and opportunities really are.

Making the business easier to own can be a worthwhile reason to develop transferability—even if you never decide to sell it.

If you want more choices about your role without giving up your investment, that is a useful place to begin a conversation.

Business Master Mechanic a Professional Service by Black Swan Advisors, LLC

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