As an Australian business owner, the journey towards greater independence and healthy work-life balance begins with structuring your business to be less reliant on you.
A self-sustaining business allows you to enjoy more time away from work and mitigates vital personal risk. Critical person risk occurs when a large portion of knowledge is solely with one or a few team members. For many small businesses, this usually sits with the business owner.
In a previous article, we discussed the multitude of definitions financial freedom could have. Your vision of financial freedom may be having the flexibility to go on a holiday for a month or spend more time with the family without constantly thinking about the business.
We have outlined a comprehensive step-by-step process to help you create a business that is less reliant on you and is self-sufficient over the long term.
How Do You Build a Self-Sustaining Business?
Step 1: Assess Your Current Role and Responsibilities.
Start by evaluating all the things on your plate. Make a list or a mindmap to ensure all your duties are laid out. Including those sneaky annual tasks you only remember when it’s time to address.
Identify which responsibilities are critical processes and tasks that require your direct involvement. Then, determine areas where delegation or automation is feasible. For example, are there programs that could be integrated?
If there are too many tasks for allocation amongst your existing team, determine if any job can be streamlined/deleted or whether more staff are required.
Step 2: Build a Strong Leadership Team.
Now that you have a clear idea of what is required to complete the tasks, you can assess the best people to do them. Having the right people in the right places can make your business run like a machine.
Identifying and nurturing potential leaders within your organisation is easier said than done but has a massive positive impact in the long term. Imagine having that family holiday and feeling fully assured your managers can handle things. You would trust in their capabilities, and you could be fully present in your break.
Alternatively, you could invest in the correct type of people who will embody the values and mission of your company.
Look for qualities that may not be reflected in their resume. Are they solutions-oriented? Do they exhibit high emotional intelligence? These are just some of the characteristics to look for in people that will contribute to the success of your organisation.
Once you have the right people, establish a transparent chain of command and reporting structure. Allocating authority and decision-making to function without you ensures the business will thrive in the long run, even when you are not physically present.
Internal structure and robust processes are essential to prevent workflow overload and clogging. For example, splitting the leadership role between two members is prudent if a department has two prominent aspects.
Step 3: Document Standard Operating Procedures (SOPs).
Another way to optimise workflow is to establish the most efficient way to complete tasks. Is there something Mary needs to do for Martha to do her part?
Have these written down and accessible to all team members needing them. Create detailed SOPs for critical processes, including step-by-step instructions that can be referred to when needed.
Document best practices, guidelines, and troubleshooting procedures. As you make the step-by-step guide (or delegate it to those who do those tasks), identify risks and where you could transfer them. This can include engaging external partners, such as IT support.
Having the information written down is priceless when training new staff or simply when you get that nagging feeling that you forgot something.
Step 4: Invest in Employee Training and Development.
A great team doesn’t just happen; it is created and nurtured. Once you have a group of dedicated and passionate people, provide ongoing training to enhance your team’s skills and capabilities.
Cross-training employees to cover multiple roles reduces vulnerability to critical man risk. It also ensures that even if they are not usually in a specific department, they can step in if needed.
Part of optimising your team is allowing them to show skills they have that may be under-utilised. In any business, innovation is the key to staying relevant. Foster a culture of continuous learning and growth within your organisation. Innovation comes from leveraging employees’ capabilities and insight to extend your business reach.
Find ways to get all team members from every level personally engaged and motivated in your day-to-day sustainability vision. Empowered employees are better equipped to handle tasks independently.
Step 5: Implement Technology and Automation.
Part of innovation is looking for new technology or programs that could revolutionise your business.
Map out all the tasks you complete as a business owner. You may uncover that there are similar features to functions that can be automated. These features could include:
- Repetitive tasks
- Boring tasks
- Frequent, regular tasks
- Rule-based tasks
- Software-based tasks
- Time-consuming tasks
Technology has significantly advanced to remove these tasks from your and your teams’ to-do lists. Invest in tools that streamline processes, such as CRM, project management, and accounting software. Automation reduces the need for constant oversight and intervention, freeing time for more quality work.
Step 6: Establish Clear Performance Metrics.
You already have business goals and a mission the business is working toward. Look within those to define key performance indicators (KPIs) for various departments and roles. Regularly review and assess progress against these metrics.
Transparent metrics hold teams accountable and ensure efficient operations. Knowing which aspects of your business generate profit and to what scale can display opportunities. On the other hand, low KPIs can indicate areas that require more focus. This could mean further team training or looking at how to improve the service or product.
Achieving these milestones is great for employee engagement as well as business progress. They can validate your growth strategies even if you are not being as hands-on.
Of course, to know if the KPIs are being met, consistent monitoring is required. Make adjustments based on the performance data, good or bad, and get feedback from your leadership team.
It is through continuous improvement that your business remains adaptable and resilient.
Step 7: Diversify Client Relationships.
Your KPIs may be a quantitative measure of your strength, but your customers show a qualitative measure. They are the goal as well as the means. But being a great business for all single mothers, for example, makes your target demographic extremely specific.
We saw during COVID-19 how instrumental early childcare is for single mothers. What happens to your business if this demographic is hit with an economic blow outside your control?
Reduce dependency on a few critical clients by expanding your customer base.
Alternatively, you can predict your customer’s needs and develop products ahead of the competition. That is not to say start an early childcare centre if it has nothing to do with your business. But if there is something adjacent to your core function that may alleviate the blockages stopping your audience from reaching you, do that.
Expanding products and services to include adjacent interests will not only protect your business from a narrow focus but could also attract a different kind of client. A device that helps single moms do it would also appeal to an event coordinator with a hundred things to do simultaneously.
Cultivate relationships with a broader range of clients to stabilise revenue streams. This diversification also safeguards the business against substantial income loss from unexpected consequences.
Step 8: Secure Legal and Financial Safeguards.
Consider protecting the business by documenting legal agreements, such as non-compete and buy-sell agreements. Consult legal and financial professionals to ensure compliance and risk mitigation for all aspects of the company.
You must comply with different legal obligations when hiring contractors compared to your employees. Ensure you understand the difference and that responsibilities are maintained if work is contracted in your absence. These nuances can be stipulated in templates used when procedures are followed. See the recurring importance of those documents in Step 3.
While building a business to be less reliant on you, you should also ensure it is not set up to rely on any of your assets. Financial professionals can assist in separating personal and business support. This ensures that if the business were to take a turn, your family home would not be up as collateral.
Structural solid and operational processes can safeguard against risks, workflow clogs and issues. All of these elements working together is what makes a business run smoothly.
Build a Better Business for You and Your Lifestyle
Transitioning to a self-sustaining business model requires careful planning, delegation, and investment in your team and technology. However, achieving financial freedom far outweighs the efforts.
A self-sustaining business is more attractive to potential investors, buyers, or partners, leading to enhanced business valuation. Ensure you continuously improve for your business to remain adaptable and resilient.
By following these steps, Australian business owners can enjoy greater freedom, reduce critical man risk, and build a more resilient and adaptable business that can thrive even in their absence.
Outsourcing the business’s financial function further allows owners peace of mind that experts are managing the company’s lifeblood. Financial stability impacts an array of business areas and aspects.
What about a finance expert who can provide business advice based on industry knowledge and experience?
At Rispin Group, our consultants formulate effective solutions for your business, from performance and development to sustainability. We are a one-stop shop for a holistic approach to getting you that work-life balance.
We are experts in business structures that protect directors and assets, tax and compliance and speaking with financiers. We can guide you through building a self-sustaining business and help provide the best solution to optimise your potential.
Contact us to get our financial planners working with you on your business.