Legacy is the most important aspect of your business, but the least thought about by most business owners. Why is legacy so important? In this post, I will show you the value in becoming intentional about your business legacy.
There are eight critical mechanical components of business. There are seven levels of core energy. I’m creating a series of posts called Business Mechanics & Mindset. You can read about these topics in more detail in my book entitled, “Business Mechanics & Mindset: How Your Thoughts Create or Sabotage Your Business Success”. Today’s post is the seventh of this series entitled Core Energy™ Legacy.
Before I go too far, I’ve created another post that you may want to read before you read this one. It is entitled “What is Core Energy?”. It explains the seven levels of Core Energy™ in detail that will be mentioned in this entire series.
If you want to watch a video of this exact same topic, go here: https://youtu.be/eMS7t3DXu4c
(Core Energy™ is a registered trademark of iPEC and all Core Energy™ concepts described in this blog post are derived from iPEC’s Core Energy Coaching™ program.)
Business as life is “temporal”. This means that it’s here for a moment and will fade away. You may grow your business and sell it. You may leave it to your family or your employees. You may support the livelihoods of your family and your employees. You may leave your customers better off with your products and services. You may revolutionize your industry. In any case, there will be some legacy that you leave behind with your business. Most business owners fail to see their legacy because they’re ultra-focused on surviving, making payroll or trying to gain new customers in the present.
In my business coaching practice, I’ve discovered that there are four key considerations around business legacy: 1) legacy mindset; 2) selling your business; 3) death & disability; and 4) personal involvement.
Legacy Mindset
Legacy mindset can best be characterized by thinking about the distant future of your business, or the culture you want to construct. Let’s consider how Core Energy™ plays a role in how you think about your legacy as a business owner.
Level 1 – Victim – At victim thinking, you will be constantly thinking about exiting. If your business is doing poorly, you will be strongly considering filing for bankruptcy and calling it quits. If your business has done well in the past, you’ll consider closing the doors, and keeping what you’ve accumulated in your business bank account.
Level 2 – Conflict – You rarely think about legacy. You are focused on the daily effort to either survive or beat your competition.
Level 3 – Acceptance – You are apathetic about long-term impact of your business. If you die, you die. Let others worry about the consequences. If a buyer offers you a lot of money for your business, great! If not, no big deal.
Level 4 – Compassion – At this level you are concerned about how your employees and customers will get along if you were to exit your business in some way.
Level 5 – Opportunity – You will be actively planning to create win/win exit scenarios for yourself and your employees.
Selling Your Business
It’s inevitable. You will exit your business. Planning for this exit means the legacy of wealth and purpose of your company will survive. Most small business owners understand that their most viable exit strategy is to sell their company.
Level 1 – Victim – Your plan is to quit. You can’t see what value your company would have to a potential buyer.
Level 2 – Conflict – While exiting your business is not top of mind. If you sell your company selling will seem like a competitive game to you. You are trying to cash out for the best win for yourself. You’ll hide flaws from a potential buyer. This often ends poorly when the buyer discovers your dishonesty, and the deal falls through. In some ways, conflict mindset business owners do differentiate themselves from their competition. This differentiation is a benefit when eventually selling the company if it’s legitimate, and not contrived.
Level 3 – Acceptance – Selling a company is more of a reaction. If someone makes an offer to buy your company, you’ll compare their offer to your expected profitability and either reject or accept the offer. Very little thought will be given to the survivability of your employees, customers, or your business purpose. Acceptance mindset business owners will rarely seek out buyers. The buyers will need to come to them with an offer.
Level 4 – Compassion – You will think primarily what a sale of your business will do for your customers and your employees. In many cases, compassion mindset business owners want to sell their company to their employees thinking that it’s a value to them. While this is a compassionate intention, it is not always true that your employees view business ownership as a good thing. The considerations often present for a compassion mindset business owner are improved benefit programs for employees; improved products and services to customers; better wages for employees, and better prices for customers.
Level 5 – Opportunity – The truly great thing about selling your company to the right buyer is the synergies that develop out of the acquisition of your company by the buyer. This opportunity often results when your company has some niche that the buying company can dramatically expand through its financial resources, distribution networks or other resources that could take you decades to duplicate on your own.
Death & Disability
We don’t want to think about dying, but it is the one exit that will derail any plans for legacy that you may have had in your exit plan. Rather than describing what this looks like at each energy level, I think it may be more helpful to describe how you handle the sudden exit of your business by death or disability.
In case you’re wondering, Level 1, Level 2, or Level 3 will completely ignore death and disability. If they die, it’s someone else’s worry. Right? At Level 4 – thoughts will turn to employees, family and customers being taken care of if you were to die.
At Level 5, you are looking at your death as an opportunity. The way that you take the best advantage of this opportunity is through a “Buy/Sell Agreement”. Here’s the way a buy/sell agreement works. If you die, your family is paid a large amount of cash through a life insurance policy. At that same time, business ownership transfers to an employee, group of employees, or a business partner. This agreement is a win/win. Your family doesn’t need to worry about selling your business, your business will continue to function without you, and your family is taken care of financially.
As simple and as beneficial as a buy/sell agreement is, it is often overlooked by business owners who never make it to Level 5 in their thinking about death and disability.
Personal Involvement
The most common topic in coaching small business owners is working on your business instead of in your business. If you’re like me, you started your business as a solopreneur. You do everything. At some point, you get help, but you still inject yourself in all facets of your business. This personal involvement in your business will dramatically limit your growth and it will ensure that you never have a legacy-business.
Let’s see how Core Energy™ levels play a role in the personal involvement you take in your business.
Level 1 – Victim – You see outside forces as negatively impacting you. This includes your employees, customers, and industry pressures. Because of this view, you are in defense mode trying to protect yourself from these threats. Your personal involvement is low, so it’s the least of your problems.
Level 2 – Conflict – You see yourself as better than your employees and your customers. You will take on as much involvement as possible. A common statement from a conflict-minded business owner is, “if you want something done right, you have to do it yourself.”
Level 3 – Acceptance – You will start to delegate work to those you feel can handle the work but withhold decision making ability to those who can’t handle difficult tasks. You believe this is just the way it is.
Level 4 – Compassion – You are constantly investing in your people to develop them for greater responsibility. As they gain the knowledge and ability to do difficult tasks, you fully delegate those tasks to them. While this characteristic is quite helpful in reducing your personal involvement, there is a downside to this energy level as well. When you see an employee who is struggling and will never grow to a level of full responsibility, you will often cover for this employee… almost to the extent that you’re becoming even more personally involved than if you replaced this employee with a more capable individual.
Level 5 – Opportunity – You fully understand that for your company to grow into a legacy-company, you must extract yourself from critical tasks. You take the compassion mindset one step further and make the hard decisions of promoting the right people, training those who show promise of growth, and replacing those who are best suited to work for someone else. This process does not happen overnight. However, an opportunist is always pursuing working themselves out of a job.
I’ve just described how Core Energy™ intersects with your business legacy. To get your legacy act together, I recommend blocking off at least 4-hours each quarter to visit these four business legacy considerations. I also recommend that you include stakeholders in this legacy thought process at least once a year. This may include key employees, key customers, and your family. This thinking is often the lowest priority of a business owner and yet the most impactful when it comes to daily thoughts and actions.
I hope you learned a few things about picking a business legacy mindset that will create your legacy-business. If you’d like to learn more about how I coach my business owner clients with Core Energy Coaching™, please visit my website at www.mmbizcoach.com.