A good business becomes a great business when the owner is “operationally irrelevant” but continues to profitably scale.
In this post we talk about the importance of being free from the day to day and getting out of the office more and allowing your people to run the business. If you don’t do this, you cannot become strategically excellent.
Here are five reasons you want to become operationally irrelevant:
Before becoming operationally irrelevant your business needs to become tactically excellent. You’ll never get the confidence to let others run your business until you have achieved a consistent level of excellence your customers can depend on.
Operational irrelevance increases the value of your business. At some point you will likely want to sell your business or put a succession plan in place. If your participation is not needed for any of the tactical parts of your business potential purchasers will become much more interested in what you’ve built.
Operational irrelevance allows you to have capacity to act strategically.
Most business owners I know can think at least a little strategically, but most don’t have the time or energy to act strategically. Becoming operationally irrelevant will give you some extra time to do things to make your business better.
Operational irrelevance will allow you to build enterprise value in your business. The vast majority of businesses don’t have any enterprise value. This is because you as an owner are tied down in the weeds of the business. If you ever want to build enterprise value (meaning your business creates significant excess cash) you’ll have to become irrelevant so you have time to look at items like return on equity, investment and assets.
You’ll have time to make small experiments that will provide big changes. You need to regularly re-invent and tweak your business. To become innovative you’ll need the time and energy to think and act. When you make yourself irrelevant you can lead a team of innovators in your company and at some point they can take this over completely, but for now you’ll have to lead the way.
“Operational irrelevance” is a major key to building a business of value and creating a great work/life balance, setting the stage for a happy exit event on favourable terms.