<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=275610486160139&amp;ev=PageView&amp;noscript=1">

Value Creation Blog

6 Reasons Why Passive Ownership Makes Sense

Posted by Josh Patrick

Passive OwnershipI find that passive ownership is often the best way for a business owner to transition out of day-to-day operation of their business.  To successfully make the move from active to passive ownership takes a fair amount of discipline.  In addition, the owner will often have to make significant changes in how they run their business.

I believe that passive ownership is often a wonderful option for those who can’t sell their business.  In some instances it’s even a better stop for those who want to sell their business, but aren’t ready to do so yet.

There are several positive things that come out of becoming a passive owner.  Some of them are:

  • You have a chance to spend time getting used to what your next life will be like after you leave your business.
  • You have the opportunity to pursue other activities outside your business that interest you.
  • You will need to develop dashboards to monitor your business performance.  This will force you to focus on the important things in your business.
  • You will need to make yourself operationally irrelevant in your business.  Becoming a passive owner will force you to delegate and delegate permanently operational activities you presently do in your business.
  • There is a good chance you will make your business a more attractive asset and move it towards becoming one that has enterprise value.
  • Taking appropriate steps towards passive ownership will often help you make more money.  Successful movement towards a passive ownership strategy forces you to make changes in how you operate your business that tap into the skills of others in your business.

Passive ownership forces you to let go and allow others to take a larger role in developing your business.  When you force yourself to put controls in place and give your key people more responsibility you might receive more satisfaction and cash.  And, for many owners this is a good goal.

I’m always curious about what business owners think about becoming a passive owner.  Let me know your thoughts.  Please either write me at Jpatrick@stage2planning.com or click here to set a time to speak with me.

Josh Patrick

I’ve put together a special report on relationships and roles in your business.  You can read our case study on how some business owner’s deal with burnout through managing their relationship with their business.  I think you’ll find the time invested worthwhile.  To order this complementary special report, click on the button below.

Relationship and Roles

Securities and Investment Advisory Services offered through NFP Securities, Inc. (NFPSI), Member FINRA/SIPC. Stage 2 Planning Partners and NFPSI are not affiliated.

This article is published for residents of the United States only.  Registered Representatives and Investment Adviser Representatives of NFP Securities, Inc. may only conduct business with residents of the states and jurisdictions in which they are properly registered.  Therefore, a response to a request for information may be delayed.  Not all of the products and services referenced on this site are available in every state and through every representative or advisor listed.

Topics: exit planning, enterprise value, business exit planning, passive ownership