Here’s Why You Need to Work On The Value of Your Business
An interesting article appeared on last month in American Express’s Open forum about working on your business, not just in it. My main beef with it is that it presents a static list of activities, not a focus.
Below is a paraphrase of the 5 points the author suggests you should do every month:
- Write a system for at least one recurring business process.
- Establish and review key performance indicators (KPIs)
- Research new technologies or learn best practices
- Connect with customers
- Network with peers
We all have heard that entrepreneurs need to set aside time to focus on the business. While I like this list, it lacks a unifying theme. The problem is that merely presenting such a list does not put the activities in any context. If you follow this or any fixed list of activities, you will soon lose the focus you were looking for in the first place.
No one seems to be asking why entrepreneurs need to spend time working on instead of in their business.
Entrepreneurs must spend time building the value of their businesses, which can only be done from an external perspective. Almost every other activity within the business can be sourced to someone within or associated with the organization. Employees should write the systems for the processes they work on. Managers should create KPIs for their departments. Consultants can teach you best practices. Sales people sell the products. The Marketing and Development teams define and refine products….And so on.
Whether the entrepreneur has investors or owns all the equity in the business, it is the entrepreneur’s job to maximize the value of the business — because only the entrepreneur can sell the business. Only the entrepreneur has envisioned the entire picture and can plan what activities will be engaged by all the company’s cogs in order to build value to the highest possible level.
As an attorney that concentrates on the interaction between business law and intellectual property, I can say that much of your thinking about building value will lead you to questions about protectable patents, trademarks, copyright and trade secrets — but it would be wrong of me to create a list and tell you to set aside time every month for those pursuits.
Furthermore, when you take that time away from the office to think on your business, think on how to build value. You might realize you need to create systems, or hire someone to do that. You might decide that your KPIs are out of whack, and you need a consultant to help you find better ones with the assistance of industry best practices. Or you might consider the problem of whether to buy new technology vs. develop it in house.
Your focus on building your organization’s value will inevitably lead you to work on your business, and lead you to a more valuable business — but it will definitely not lock you into a fixed list of activities.
