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What the Founder Should Do

The founder of a business should meet the challenge to transition from being a provider of a service or a product to becoming a business manager. If the primary motivation of a business is to make money, the founder needs to perceive that money comes out of the business (1) as the money is made and (2) when the business is transferred for value. The founder must also accept the absolute fact that an involuntary transfer could happen at any time (the easiest example is death).

The wealth-building event is transferring the business for value. For various reasons (mostly involving issues of control), founders tend to resist delegating and creating management competency in the business. Often what changes the course is helping a founder understand that the more the business depends on the services of an owner, the less it is worth on transfer. A sophisticated buyer will have a problem with the purchase of a business which requires the services of the seller. The challenge is met when the founder accepts the wisdom of hiring others to manage the business well by constantly preparing it for a transfer for value by internal sale (pursuant to owners’ agreement) or external sale (to a third party) for maximum value.