Most entrepreneurs will not successfully build sufficient equity value to ensure a lifetime of financial security beyond the business. The following are four psychological reasons why entrepreneurs fail to maximize business value.
1. Denial of mortality
Nobody plans to fail, but most people fail to plan. Most especially, nobody wants to plan for dying before dying, and as a result the epitaph for far too many business owners is “I buried my business with me.”
Many entrepreneurs foolishly think that dying is not an option and that when the actual time comes for them to leave the business either voluntarily or involuntarily, they will have a lot of options available. They are not convinced that they need to consciously build business value in advance and, therefore, it’s not treated as a priority.
However, this is a harmful belief because it takes devoting a number of years in order to build a business for maximum value and to intelligently transition it either internally or externally.
2. Feeling overwhelmed
The feeling of being overwhelmed immobilizes taking action. Enrepreneurs are required to perform numerous roles every moment of every day. What contributes to being even more overwhelmed is that many of the role activities are “know I should do” but are constantly deferred because the activity is unfamiliar with the perception of requiring a lot of committed time and effort.
Therefore, the getting started doesn’t happen until some event manifests forcing that action be taken, often too late (Shoulda, Coulda, Woulda). The deferral of building business value and sellability is a prime example of a seemingly overwhelming activity that should be done sooner than later and isn’t.
The result is that most businesses don’t survive to a subsequent generation or transition for maximum value and personal wealth to the owner and family. Moreover, when an event such as death, disability, disagreement, or retirement occurs, the outcome frequently is disastrous and financially painful.
Having a systematized program to build business value can greatly diminish the overwhelming feeling. It can kick-start in a timely manner the process, provide a roadmap for the value building journey, and simplify and guide what’s required to ensure an enriched life beyond the business.
3. Fearing the unknown and the risk of failure
Fear of the unknown and failure often causes business owners to not go beyond their comfort zone to take the action required to grow their company for maximum value. It’s difficult to recognize or admit that fear is the culprit which is limiting the growth. However, the fear of letting go and giving up control are often the biggest roadblocks to building business value. Using a proven value building system can make the challenges more comfortable and rewarding.
4. Uncertainty about goals and objectives
“If you don’t know where you’re going you’ll never get there!”
Lack of clarity and focus about goals and objectives, and not committing to a set direction are major causes of failure for entrepreneurs because it leads to poor prioritization and time management. You’re not able to plan and organize your time efficiently and effectively if you’re unsure about what it is you are trying to accomplish. This leads to feeling overwhelmed and allows fear to cause inaction.
With respect to building business value, the entrepreneur should decide early whether to build the business for an internal transition or sell to an outside third party. The planning strategies, management decisions and developed infrastructures involve different priorities and processes.
The entrepreneur needs to build an infrastructure and develop a management team that enables the business to operate without a daily presence being required. It takes years of planning and implementation being performed well in advance of the intended event to produce the most rewarding results.
CLICK HERE if you’re an entrepreneur who wants to overcome the four psychological roadblocks described above, and obtain a free report which scores specifically the current relative value of your business on a scale from 0 to 100. A score of 80+ is the desired goal you should be striving to achieve.