You’re a successful entrepreneur. You run your business well, and it has been growing consistently for the past few years. You’ve hired people to help you grow, and you’ve rewarded their strong performance.
Life is good, and the value of your business and your cash flow are growing.
Your business’ revenue is like the accelerator pedal on your car; it’s what propels you forward in the direction of your choice. And just like your revenue helps to determine the value of the business, the accelerator is one thing that helps determine the value of the car.
Consider, though, what the value of the car would be without a braking system…without any way of stopping or slowing down. Would you ever drive that car? No matter how fast that car could go, would it have ANY value at all?
Your business ought to have a braking system, too.
As a business owner, if you were to become sick or injured and unable to perform well in your role, 3 critical aspects of your life would be at risk:
- Your personal cash flow – how would you generate revenue to cover personal expenses?
- The value of the business – would the business be worth as much without you charting its direction?
- The viability of the business – would the business even survive, and what would happen to your employees?
There are ways to address all of these through insurance and legal documents. And while many (most?) folks think of these as “necessary evils”, we invite you to consider that protecting yourself and your business is like the braking system of your car. The presence of them not only provides a backup plan in the event of life’s “what if’s”…but they actually can help increase the value of your business, making it more attractive to a buyer one day.
There are other ways to minimize risk in your business: diversifying your client base, documenting procedures, and creating employee incentive and retention programs are a few that come to mind. Implementing proper amounts and types of insurance and legal documents, though, are often the simplest and quickest ways to reduce risk.
Not sure where to turn to get these started? Reach out to us…we’ve helped many other entrepreneurs implement ways to Protect, Grow, and Exit their business.