One of the most important value drivers of a business is severability from its owner. Whether you want to sell today, or in a decade, it is crucial for business owners to create a company that can operate successfully without them. If you can’t “cut the cord” between you and your business, it is more than likely that you have a job, not a business.
These eight points clearly distinguish between owning a business and having a job. Let’s break them down:
- Revenue Generation:
A business consistently generates its owner revenue, even when they are not present. A job requires you to show up and perform to earn an income. - Customer Dependency:
If a business relies heavily on a single customer to dictate its products and operations, it resembles more of a job than a valuable, independent entity. - Brand vs. Personality:
A business’s success is largely determined by the strength of its brand, not solely by the reputation or personality of its owner. Your personality impacts the results of a job considerably more. - Process vs. Personal Expertise:
A business operates based on established processes and systems that consistently deliver results, while a job relies on your personal experience and expertise to achieve results. - Vacation and Performance:
In a job, taking too much vacation may lead to repercussions, whereas in a successful business, the owner’s ability to take time off without negatively impacting performance indicates a well-functioning enterprise. - Effort vs. Efficiency:
While effort may directly correlate with earnings in a job, a business owner is rewarded for their company’s efficiency and effectiveness over sheer hard work. - Problem Solving:
In a job, your role typically involves handling day-to-day issues and problem-solving, whereas a business owner can delegate responsibilities to their employees to solve smaller issues, allowing the owner to focus on larger strategic decisions. - Personal Contact with Customers:
If the majority of customers’ primary interaction with the business is through the owner on a personal level, it suggests a job-like relationship, whereas a business should be structured to function independently of the owner’s direct involvement.
By assessing these criteria, business owners can determine whether they are truly building a valuable, saleable asset or simply operating a job for themselves.
If you’re looking to learn more about how you can further distinguish your business from a job or you are looking for advice on selling your business, please contact us!