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I believe becoming a passive owner is a sign of maturity in the business owner. A passive owner is where you get out of the way and make yourself absent from the day-to-day operations in your business.

When you get yourself to this stage in your business you’re going to find that options open.  You’ll have opportunities that you may have never thought about before.  It’s the opportunities that will likely make the pain of becoming a passive owner worthwhile.

Step one – systemize your business.  I know that you have an incredible amount of knowledge hidden away in your head.  That’s the problem.  You know what to do, but those who are working with you don’t. 

Until you can transfer your knowledge to others around you, you’re going to be stuck living in the weeds of your business.   What you think is easy, others think is hard.  The reason they think it’s hard because they don’t understand the steps you take.  You need to make systems out of the hard things in your business.  When you do this you’ll take a step towards operationally irrelevance and passive ownership.

Step two – Develop a dashboard.  You’re never going to step back if you don’t know what’s going on.  A dashboard is a one-page document that you get weekly.  This report shows you the important things that are happening in your business.

The purpose of your dashboard is to give you an early warning when things are going wrong in your company.  It’ll also tell you when things are going right, but I bet you’re more interested in knowing when it’s time to step back in and keep bad things from happening.

Your challenge in putting a dashboard together is to know what numbers will move the needle in the success of your company.  For some companies it’s dollars of production per hour, for others it’s their backlog and for still others it might be how many sales calls are being made.  Only you and your management team can make this decision.

Putting together a dashboard is something that you’ll want to experiment with.  While you’re establishing systems for your company to run you’ll want to try different dashboards to see what combination gives you an early warning system that you can trust.

Step three – find a key manager.  If you as the owner are the go to person in your company it usually means you don’t have a key manager who can take over.  You might be hesitant about leaving your company in the hands of the people you have now.  That’s a normal place to be.

Finding a key manager who can run the company is the last step in becoming a passive owner.  You’re going to want someone who you can trust to run your business and make good decisions when you’re not around.

Finding this key person is a challenge.  Not only will you have to likely pay a lot more than your used to paying, but you’re also going to have to learn to let others make mistakes.  I find that when I coach people like you, it’s learning to let go that often is the hardest thing to do.

If you’re willing to try passive ownership activities you just might find that you get more free time.  You might even find that you enjoy not dealing with the nuts and bolts in your business.  Letting others take over can be an experience that frees you for more interesting work that adds way more value than answering the same question for the hundredth time or so.

We’ve put together a case study that reviews the Four Stages of the Private Business Owner.  In this case study you’ll learn what the difference is between a player, a coach, a general manager, and an owner.  Passive Ownership happens when you primarily are the owner in your business.  To get this case study, click on the button below.


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: operational irrelevance, for business owners, passive ownership

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