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I write a lot about why passive ownership makes sense.  There are some reasons where passive ownership won’t work.  I recommend you read over this list and see if it describes you.  If so, you will want to take passive ownership off your list of options…..or, you could decide to change how you act in your business and give passive ownership a shot.

Here’s the list:

  • You aren’t willing to share any of your financial information with anyone in your company.
  • You hate to delegate.  You believe that you can do things better and faster than anyone else, so why bother delegating.
  • You don’t have systems and don’t want to put systems in place that allow others to replicate what you do.
  • Your business can’t become profitable enough to allow for new employees that can run your company.
  • You have no idea what you would do with your spare time if you decided to back out of day-to-day operations.
  • You love operations and have absolutely no interest in having others take over.
  • You think developing key performance indicators won’t do your company any good.
  • You don’t want anyone to make mistakes in your organization.  If they do make mistakes you won’t let them try again.

Many would see the above list as negatives around business management and ownership.  They could be negative or they could just be the way you like to run your company.  In either respect, if any of the above items describes you, passive management probably won’t work very well.

This is the time to be honest with yourself.  It’s OK not to have your company ready for passive ownership.  You just have to know that you’ll have to stay fully engaged and if you want to do a third party sale, the amount of money you will get will be less than if you have made yourself operationally irrelevant in your business.

Josh Patrick

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: for business owners, business exit planning, passive ownership, exit strategy business plan, Key Performance Indicators (KPI)

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