04-07-2025
Are your employees going to lose their job
when you stop working?
I recently met the owner of a medium-sized precision engineering business. He explained that although he was beyond legal retirement age, he had no intention of retiring any time soon as he enjoyed running his business. He knew every aspect of his operations, had built strong relationships with clients, and took pride in the quality work his team delivered.
When asked what will happen to his business once he won't be able to work any longer, he said he didn't know but he was not concerned as he thought there was plenty of time to think about this.
This response, while understandable, revealed a common blind spot that could have serious consequences for him and for his employees.
Risks if the owner has not prepared his business
I have come across similar situations when small business owners were not prepared to think about the time when they won't be able to carry on working. Life circumstances can change unexpectedly: health issues, family situations, or the desire to step back can arise sooner than anticipated.
Rather naively, many owners think they will sell their business easily when the time comes. They assume that because their business is profitable and has loyal customers, buyers will be lining up.
However, potential buyers don't just look at current profitability. They evaluate whether the business can maintain its success without the current owner.
A business that depends entirely on its owner's knowledge, relationships, and daily involvement is not an attractive acquisition target. Buyers want to purchase a business eco-system, not just a business that requires the founder's constant presence.
If unable to sell, the owner may reluctantly be forced to close the business with his loyal employees losing their job in the process.
This scenario is unfortunately common and represents a tragic waste, both in terms of the financial investment the owner has built over the years but also in terms of the livelihoods of dedicated employees who may have spent years contributing to the company's success.
Preparing your business
Whether you wish to grow your business or whether you wish to sell it, the requirements are remarkably similar. In both cases you need to:
✅ Build a team with the skills, experience and capacity to run your business in your absence.
This means hiring capable managers, cross-training employees, and creating depth in key positions so that no single person becomes indispensable.
✅ Introduce and set up effective internal systems to generate and share relevant and reliable data to manage production, engineering, projects, finance and HR.
Effective businesses need systems that provide visibility into operations and performance.
✅ Document processes and procedures so the business is not overly dependent on key individuals.
Everything from client onboarding to quality control should be defined and documented, ensuring consistency regardless of who performs the work.
✅ Generate and review management accounting data regularly to monitor business performance.
Accurate, timely financial reporting is essential to make informed decisions and demonstrate value to potential buyers.
The preparation process typically takes 3-5 years, so starting early is crucial.
In summary
➡ If you wish to sell your business, its value will be greatly reduced if it cannot be run effectively without you.
➡ Equally, if you wish to scale up your business, you will struggle to find the time to focus on its growth if it overly relies on you to operate.
➡ Whether you are growing or selling your business, you need robust data to document, monitor and forecast financial performance.
Your employees have invested their careers in your vision. By preparing your business for eventual transition, you're not just protecting your own financial future. You are also safeguarding the livelihoods of those who helped you build your success.
Help
I work with overstretched leaders of Engineering SMEs to help them prepare their business so they can scale it up profitably or sell it for a fair price.
To explore how I could help you, please use the link below to arrange a free 30-minute conversation