If I were to distill the top Frequently Asked Question (FAQ) I get from business owners, it’d be this:
“How can I/my business do ‘better‘?”
My response is, “Do you mean you personally or your business? And what do you mean by ‘better‘?” This is The Question of about what I call “alignment” between the owner and the business.
We at Jon Hokama and Associates, LLC (JH&A) have found that all business owners want their businesses to serve their life, but often feel that they are in a wrestling match to gain the upper hand! Too often these owners find that they are giving away too much time (and money!) serving their businesses. To get the owner out of this wrestling match, let’s open the door for him to dialogue with his business and create better alignment. Let’s suppose you, the business owner, could have a candid conversation with your business. (If there is also a partner involved, these questions are equally valuable discussion starters to have with your partner.)
Here are four key questions you need to ask to discover how well you and your business are aligned.
“Why are we (still) together?”
The common reasons an owner and a business flourish together are because:
- The owner and his family get a solid income from and equity in the business.
- The business has a solid brand that perpetuates the virtuous cycle of client acquisition and referral.
Most owners start a business to control their own destiny, to provide for their loved ones, and to make a difference in their world. Over time there may be a greater divergence in purpose. Then the owner and the business experience less alignment and more tension and may want to consider a divorce! Some common examples of misalignment might be:
- The business has a different product or service mix than when first started and the owner feels an increasing distance from end clients or the product/service delivery process.
- The owner may find a growing interest in wanting more freedom/time off.
A good question to ask is, “Is there still good alignment between why I’m in business and what the business needs from me? Or is it time to get ready to sell?”
“What are each of us doing?”
The business-owner relationship should be one of mutual benefit. Sometimes the owner overcompensates for the business OR visa versa.
In the early stages of a business, the owner does nearly every function from advertising and sales to delivery to accounting/finance to operations to HR. Over time the owner usually brings in or outsources areas outside the firm’s core competency. Sometimes the owner is reluctant to give up control and overcompensates for gaps in the business. At different times, life circumstances may cause an owner to lose focus and need the business to compensate for him. He allows the momentum of the business to carry it forward. At some point, the owner needs to reengage the business to insure it gets the leadership/mentor-ship needed. A good question to ask is, “Is there still solid alignment between what I want do and what the firm does? Or does it still demand that I wear too many ‘hats’? ”
“Where do we want to be? ”
Most businesses have a specific service area, geographic location and customer base tied to a location. When the business begins, it may work very well for owner and business but over time may become increasingly misaligned. Some factors that may drive these changes include:
- The business is “landlocked” and has to change location to accommodate growth.
- The business may acquire a subsidiary or branch in another city or state and has to make decisions about where the headquarters are to be located.
On the other hand, the owner may find that the location is less than suitable because of a changing life situation. For example:
- Aging parents: the location of business may make it difficult for the owner to support those family members
- Adult children and grandchildren: when they are out of state or business requires the owner to have an excessively hands-on role (see “What” question above), the owner’s location needs become misaligned with the business.
Unsurprisingly, we have seen company divisional headquarter locations determined by senior executive preferences and needs!
“When do we want to part ways? (Or invite in someone to take over?) ”
The business may be structured in a way to insure it “outlives” the life of the original owner. Consider the very rare successful multi-generation business. On the other hand, most business owners have no clear exit plan in place. According to one of the industries we work with, only 25% have a succession plan in place to ensure their business transitions appropriately when they retire. The percentage with a formal plan increases slightly to 31% at age 60-64 and 41% at age 65+, according to an FPA Research and Practice Institute study.
It’s difficult for a founding owner to bring closure to a chapter of his business. He needs to dialogue with his business to find clarity about personal life vision and see how it aligns with that of his business.
The best time for this dialogue with your business is 3-7 years before you intend to buy or sell your business. The next best time is TODAY. Business brokers like The FBB Group, Ltd. and business advisory firms like JH&A can help you facilitate this kind of discovery conversation between you and your business or you and your partners.
A certified Crankset Group facilitator for business owners, Jon also draws from over 15 years’ experience as a Leadership and Executive Coach and Organizational Development (OD) Consultant. Jon can be reached at JonHokama and Associates, LLC, (303) 871-9550, firstname.lastname@example.org or visit http://www.jonhokama.net
(originally published in June 2015 eNewsletter)