Three Actions to Become Less Central to Your Business: How to Reduce Owner Dependency
If you stepped away from your business for 90 days, what would happen? Would your team make good decisions? Would your clients stay, your revenue hold, and your operations continue without you in the room? For most owners, the honest answer is uncomfortable, because the business works largely because of them: their relationships, their judgment, and their presence.
That's an ExitReadiness® issue. A business that depends on its owner isn't as transferable or as valuable as it could be. A buyer, successor, or next generation of leaders can't step in with confidence. Owner dependency is one of the most consistent value killers in exit planning, and also one of the most solvable. It isn't complicated, but it does take intentional, disciplined action.
In this episode, Pat Ennis and Walter Deyhle welcome back Laurie Barkman, growth strategist, Certified Exit Planner, M&A advisor, and founder of The Business Transition Sherpa®. Laurie shares three practical actions owners can start taking now to step back from the center of the business: find where you're the bottleneck, write down your goals, and unlock the repeatable processes that let the business scale without you.
Key Takeaways
Separate the economics from the operations. Many owners run personal expenses through the business. That can be fine if it's tracked so the expenses can be added back in a valuation; if it isn't, you may be understating the company's true profit.
Start by finding where you're the bottleneck. Red flags include generating more than about 40% of revenue yourself, being the only one who approves drawings or deliverables, and routing every expense or decision through you without clear thresholds.
Track your time to see reality. A two-week to one-month time study, in 15-minute blocks, reveals where hours really go. One team discovered how much time went to internal meetings and email, and found client time they weren't billing.
Use the Skill-Fun Box. Sort your tasks by whether you're good at them and whether you enjoy them. Anything you're not good at and don't enjoy is the first candidate to delegate, outsource, automate, or eliminate.
Write yourself a job description. Most owners don't have one. When they write it, strategy, working on the business, and succession planning show up, which are often the very things they never get to.
Write down your goals and share them. Goals that live only in your head are less likely to happen. Everyone's goals differ, whether that's maximizing value, preserving culture, or family legacy, and they should guide every decision.
Unlock repeatable processes. A five-minute task you do five times a day, five days a week, is a prime candidate to systematize. Look for processes that are repeatable, valuable to clients, and able to help the business scale.
A vision of what's next makes letting go easier. Changing your role is hard, especially after decades. Knowing what you're moving toward helps owners hand off what they've always done.
Where to Start: Laurie's Three Actions
Look in the mirror and find your bottlenecks. Do a time study, sort your tasks with the Skill-Fun Box, and compare where you spend your time with where you should be spending it as owner and CEO.
Blueprint your vision. Write down your personal and business goals for the transition, and share them with the people who need to know.
Unlock operational bottlenecks. List your core processes, note who owns each one and how streamlined it is, and identify which can be taught, outsourced, or automated so the business can run and grow without you.
About Laurie Barkman
Laurie Barkman is a growth strategist, Certified Exit Planner, M&A advisor, author, and founder of The Business Transition Sherpa®. She helps engineering, architecture, and design services firm owners build scalable, self-running businesses that create more time, freedom, and long-term value. She is the author of The Business Transition Handbook and host of the award-winning Succession Stories podcast.
Connect with Laurie: LinkedIn · btsherpa.com · Successor Assessment
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Full Episode Transcript
This transcript was generated automatically and lightly edited for readability. It may contain minor errors.
Hey there, this is Pat Ennis of ENNIS Legacy Partners. Welcome to the ExitReadiness® PODCAST. Our mission here on the ExitReadiness® PODCAST is to provide you, the business owner, with subject matter expertise on topics pertaining to building transferable business value and then planning your eventual exit from the business. We want to help you build a business that's transferable and then help you exit successfully on your own terms and conditions. And here's a question that's worth sitting with, listeners, for a moment, two moments, three moments, maybe more.
If you stepped away from your business tomorrow, not permanently, but for about 90 days, what would happen? What would it look like? Would the business continue to run the way you'd want it to run? Would the team you left behind be making good decisions, or would they be in constant contact with you while you're on the beach drinking a mai tai, or piña coladas, or whatever you drink on the beach? Would your clients stay? Would your revenue hold? Would it grow? Would your operations continue without you in the room making decisions?
Well, for most business owners, the honest answer is uncomfortable at the least, because most owners have built something that works. It works a lot, and it works oftentimes largely because of them, their involvement, and how central they actually are to the business: their relationships, their judgment, their presence. And here's why that matters beyond the day-to-day. A business that depends on the owner is not as transferable as the owner would like it to be when they want to transfer it. It's not sellable at maximum value if it's still too dependent on the owner.
It's not something a buyer, a successor, or a next generation of leadership can step into with confidence about the future without that owner continuing to be there. And so owner dependency, or overdependency, is one of the most consistent value killers we see in exit planning, and one of the most solvable. It's not complicated, but it's not really easy either. It just requires intentional, disciplined action. And that's what today's conversation is about.
We could talk about a whole lot of different things, but we're going to narrow it to three practical actions that you, the business owner, can take right now, starting today, to begin stepping back. Not stepping back entirely right away, but gradually building the kind of independence in your business that's going to create the transferable value we continue to talk about. And we have with us a return guest and friend, Laurie Barkman. I think this is her third time with us. Laurie is a nationally recognized growth strategist, speaker, and past CEO.
She's helping primarily engineering, architecture, and design services firms, though she's not limited to those, scale their companies with clarity and confidence. She's the founder of The Business Transition Sherpa, author of The Business Transition Handbook, host of the award-winning Succession Stories podcast, a Certified Exit Planner like us, and an M&A advisor. Laurie's helping owners build scalable businesses that are less and less owner-centric. So it's great to have her back with us again. Laurie, welcome back. Good to see you.
Thanks so much for having me back. Third time's a charm. This is a great conversation, and I love how you've teed it up here on the ExitReadiness® PODCAST. The theme for today, as you've said, Pat, really starts with the owner. I think there's a difference between the economics as a business owner and the operations as a business owner. They really can be separate, but especially when we're the founder and we're growing the business, we're very much still involved in it.
Those things are intertwined. On the economics, maybe I'm getting a salary and I'm taking distributions, and maybe my spouse is getting a salary even if they're not working in the business, and we go on trips that maybe aren't business trips but we're expensing them, and we're building a barn and the barn is going to be a business expense, and things like that. So on the economic side, we have to be careful that the business we've created isn't just a job, and it's also not just a cash register for you and your family. Now, if it is, and we're accounting for those things and have a great way to track them, so that one day we can go back, isolate those expenses, and do add-backs as needed in a valuation exercise, then that's okay. We all understand that business owners make decisions to potentially mitigate taxes and things like that.
But at the end of the day, if we don't know what those owner-related expenses are and can't account for them, then we might be understating the net profit in the business. So that's one thing. And then on the operational side, and I think Pat teed this up very well, we can have lots of conversation today about what owners should be thinking about when they look in the mirror. There's a great Michael Jackson song, "Man in the Mirror," about how change has to start with yourself. For the business owner, it starts with you.
Business owners, I think you're listening to your show, so I'm talking to you. You've got to look in the mirror on these things and ask, where are you the bottleneck in the business? So I'd love to talk more about all of that with you today. Yeah. Well, let's do it. There are a number of different things we could talk about in regard to owner centricity, but let's focus on the three actions you've come today all fired up about.
Let's talk about that. What's number one? Yeah. So, three actions: how can business owners start to untether? The very first one I've sort of already mentioned, which is that we've got to look in the mirror. Are you the bottleneck in your business? Let me give some examples of where you could be a bottleneck.
You might be a bottleneck if you're running the sales process and you yourself, as the owner, are generating more than 40% of total revenue for the business. That's a red flag. Maybe you're generating 10%, or maybe you're only working with strategic accounts. Great. The other thing, particularly around the sales process, is whether you're bringing other people along on a ride-along with you. That's awesome if you are. If you're not, it poses the risk of who holds the key relationships.
The other thing to look at on the bottleneck side could be product or service creation or delivery. A lot of times, as the founder, we stay really close to product or service delivery. Let's say it's an engineering company. Maybe all the drawings have to go through you. Are you the only certified engineer in the business? I've had a client in the civil engineering space where one of the owners was the only licensed surveyor, and she had to spend nights and weekends reading through and approving the drawings.
Well, obviously she's a bottleneck, and it wasn't healthy or sustainable for her and her family, and it's been a challenge. Burnout is a really, really big risk. Throughput and efficiency become a risk. Cost becomes a risk. Again, on the bottleneck side, there could be any number of things where you are the bottleneck.
Maybe it's decision-making, where the decisions, big and small, are all running through you. An example, of course, would be on the financial side. Maybe we have other people approving expenses, but the threshold is not clear, so all expenses go through you, versus, if it's under whatever thousands of dollars, it could be auto-approved by our controller or office manager. There are examples of things we can delegate where we put some controls and parameters in place. So thematically, number one for sure is: are you a bottleneck in your business, and identifying why and how we might change those things.
Okay. Yep. So what's the action, then, that we're going to recommend today in regard to the bottlenecks? First, an assessment or analysis of where we're seeing those bottlenecks? Yeah. The exercise I do with my clients is a time study. If they're open to it, they'll do it for a month.
With clients that are service businesses, like engineering firms or marketing services firms, time is money and time is our inventory. Our people's billable hours are the inventory. A lot of service firms that are not tracking have no idea where the inefficiencies and the costs are. We did this exercise with a marketing services client of mine, and it was so eye-opening. Not only did we have the owner do this exercise, we had their entire team, let's say 10 or 12 people, do time tracking for a month.
Was it fun? No, of course it wasn't. But what really opened their eyes when we got the data back was how much time was spent internally on meetings, internal documents, and email correspondence back and forth, internal, not with clients. And then they uncovered where they weren't charging clients for their time when they could, such as travel and other things. It was incredibly valuable. It also helped them understand the power of the data, and I've encouraged and supported them and helped them find a good platform not only for timekeeping but also integrated with project management.
So it's not just owner-specific in that example, but it really did start with the firm owner, who needed to check in on what culture they were creating, where it was okay to send a too-long-didn't-read kind of email. It probably took them an hour plus to write, and now you've got everybody reading it, with all that time. So I think starting with a time study could be a great place to start, even if it's just you doing the time study on yourself. Do it for two weeks, see if that's a normal period of time, and if not, make it longer. I have a template for this and everything, but basically you track in allotments of 15 minutes if you can, start to see patterns and categories of how you're spending your time, and make note of them.
So whether it's internal or admin, client time, or project development, whatever those categories are, look for those patterns, because essentially what we're going to do is a roll-up to find maybe five or six categories of where you're spending your time in any given month. Then we do percentages. Let's say we have 30% of our time spent on this, 20% on that, and 10% on something else. And then we say, okay, given your job description, which you probably don't have written down, but given your theoretical job description as the owner and CEO of this firm, where should you be spending your time? I did this exercise with a client of mine in California who's the founder of a construction services firm, and it was so eye-opening for him.
As you would guess, he was doing a lot of administrivia and less of other things. The follow-up exercise we do is what I call the Skill-Fun Box. The Skill-Fun Box measures where your highest and best use is in your business and where it makes you feel good. If we're good at something and we feel kind of crappy doing it, you're not going to want to do it, right? And the opposite is true: if you're not good at it but you enjoy it, maybe we just want to make you better at it.
So there's the mood and the emotion around doing these things, like, "Oh, I'm good at this, but I just hate it. I never want to touch it." Or, "I'm bad at it, and I don't want to do it." So we put these in four quadrants: good, not good, like it, don't like it. What are we looking for? The obvious red flag space: not good at it, don't enjoy it. Let's start there.
Now we have a delegation conversation, or an outsourcing conversation, or an elimination conversation: what are we going to do with these roles and responsibilities to get them off your plate or make them more productive? There are lots of options. Can we automate? Identification is the first step. So yes, you said assessment. Absolutely: let's assess where we are today.
When I brought this up with the client in California, he said, "Well, I don't have a job description." And I said, "Yeah, that doesn't shock me. Let's write one for you." And guess what shows up in the job description? Strategy, working on the business, succession planning, things he just wasn't able to get to or that weren't on his radar. Now, with this strategy of what he should be doing and making time for, you have the as-is and you have the should-be. That, in a nutshell, is a combination of exercises.
The action plan here starts with you. You've got to look in the mirror and then take the time to identify what's bringing you joy, what's bringing you down, what you're good at and what you're not, and what ideas could really make a difference so you can start to delegate. And these are building blocks, right, Pat and Walter? Because now, if we can bring other people, other teams, or automations into the process, we're unbottlenecking. We're untethering, and we're creating value. This is good, healthy work to do, and the good news is you're going to be creating enterprise value by doing it.
Okay. So number one is bottlenecks, and you want to assess and expose reality. We like to use that terminology: what is, and what should be. And I like the idea of identifying patterns that lean toward owner centricity versus the opposite. So bottlenecks are number one. What's number two?
Okay. One of the things I wanted to share today, which is new on my end, is a proprietary model I've created that I call the BUILT Method. For architecture, engineering, and design, it's kind of an homage to the industry, the built environment, but BUILT stands for something. The B doesn't stand for bottleneck. B stands for blueprint: we want to blueprint your vision and the model you want for yourself and for your firm.
I put the bottleneck part first because it's triage. If we're really in a situation as an owner where we're working 60-plus hours, we're burning out, we're facing divorce, and our health is an issue, you've got to put out the fires. So I think starting with owner dependency is a great place to start. The second part of this, Pat and Walter, I believe, is goal setting. A lot of owners don't have their vision of their future laid out, or if they do, it's just in their head; it's not on paper.
If we have goals and we haven't written them down and shared them widely, and no one else knows what they are, are they going to happen? Probably less likely, right? I think studies have been done on this; you're something like 40% more likely to achieve them if you write them down. And by the way, let's communicate and share. So: blueprinting your vision for your personal transition. I'm curious about you guys, but a lot of the clients I work with are five to seven years out.
They're Gen Xers like me, in their mid-50s, five to seven years away. They're looking at the baby boomers and going, "You know what? I don't want to do it the way they did it." So they're interested, but they don't know where to start, it feels confusing, and so they just feel stuck. What I like to do with clients is sit down and really get to know their business, of course, but we also need to get to know what's important to them, their family, and other stakeholders. Believe it or not, I have one client in his 70s, and he and his wife have said it's not about the money.
They're very insistent about that. They want to maximize value, but it's not the only thing. They want to preserve the culture. They care about their family and the legacy implications of wealth transfer to their family, and seeing the joy some of that wealth transfer can bring sooner rather than later. Again, they're in their 70s, so you know what I'm saying. People in their 50s and 60s hopefully have the benefit of more time to see the fruits of their labor and enjoy them.
For some, it's, "You know what? I have another business in me." Sometimes we hear that, too: "This has been great; I'm ready to move on." People in their 40s and 50s have the luxury of more time to maybe start another business or buy a business, and I see that a lot with serial entrepreneurs. So everybody's goals are different; that's what I'm saying. It just matters that we articulate what yours are, write them down, and use them as a lens for action that aligns with your goals. Good.
Okay. And then number three. The third thing is unlocking. At a high level, BUILT stands for the blueprint, which I covered; unlocking operational and leadership bottlenecks, which we'll spend time on now; integrating your systems, structure, and team; leading with clarity, not chaos; and the T stands for transition with confidence and control. So back to the next piece, which is unlock. What can we unlock?
Well, we've talked about how the owner can stop being the leadership bottleneck. Now on the operational side, once we've done our time study and understand the opportunities, one of the things to look at is what's repeatable. You might think, "Oh, I'll just do this. It takes me five minutes." Okay, but are you doing that thing five times a day, five days a week? That's a great candidate for a repeatable process that might be automated or taken off your plate as the owner.
When it comes to automation tools, this fits in really well, including the use of agents in some businesses. How can we automate certain tasks related to the financial side of the business? Maybe there are things related to accounts payable and accounts receivable that can help speed up payments or meter out decision-making around when things should be paid. So really take a look at the repeatable processes in your firm. And it's not just the repeatability that's key here; it's also the opportunity to scale, and the value.
If we have a process that's teachable, outsourceable, or automatable, it's repeatable, right? It can be repeated. Is it something of value to our clients? Do they care about it? Maybe they're even willing to pay for it.
And is it something that can help your business scale? Those are some of the columns I would put in a table, if you're thinking visually about what this looks like. On the valuable side, you might get even more specific about which processes we're talking about and go through the checklist. And the processes, by the way, could be service processes. Let's say you're an accounting firm, and you do an annual tax process and client intake.
You could write down your core processes and then evaluate them through some of these lenses. It will bounce us back to that original conversation of who; maybe that's a column. Who's in charge of this process right now? How streamlined is it? If any of my owners out there, especially in engineering firms, have spent time doing process improvement, then this is inherently going to click and make sense.
It's the same thing we do for clients to help them with process improvement, and a lot of times we're not eating our own dog food on it. So not only are we unlocking, because we're attacking these bottlenecks, but there's also the integration side, the I in BUILT. It's an integration opportunity for structure. It's going to have implications for how you structure your business and your team, identifying roles you might need that you don't have today, or vice versa, roles you don't need anymore. Okay, good.
So in summary, then, we've talked about assessing where the owner, or owners, are too central to the business, and what needs to be delegated: what is now, what it needs to be, and who we need to include that we're not including in regard to roles and responsibilities, identifying patterns that need to shift to other people. You've talked about the importance of the owner's goals and objectives, which are foundational to exit planning, because it's not unusual for us to get a new client who thinks a sale to their management team is what they want, only to go through the process and find out that, based on all their goals and objectives, a third-party sale is what makes the most sense. So goals and objectives are foundational; you've got to do that. That's an action. And then systems: putting effective operational systems in place that help decentralize the owner.
Is that basically a summary? That's a great summary. With the delegation piece, that can be the hardest, because they've got to change their role. They've sometimes been doing it for 35 years, but even if they've been doing it for five, it can be really hard to change. That could be the hardest thing. A lot of times it's not complicated: "You should not be doing this; they should be doing this." It's not rocket science, but it's hard.
It's hard to let go, and it's hard to change. So sometimes it just takes a lot of patience, diligence, and intentionality, like Laurie said. And what we have found, and Laurie actually hit on this in her second point, is that it helps the owner to have a vision of what's next. Hence, as you know, we created ExitReadiness® Next Act. It's based on the Japanese philosophy of ikigai, and it's a process of helping folks think about what's going to come next that will be meaningful and purposeful, because they've had so much meaning and purpose in their lives for however many years.
They've had a lot of impact on a lot of different people. If all that goes away, they're going to be miserable. But if they have a vision of where they're going, a lot of times it can make that change of role easier. We can go back to it and say, "Okay, look, I know it's tough to give that up. You like doing sales. You've been doing sales for 25 years, but you've got to give it up. Now, let's look at what you want to do next, and remember that, because that's where we're headed."
We've found that can be very helpful: reminding them of the vision they're working toward. Laurie, what do you think about that? I think that's right. I've created a set of tools I call the Endgame Entrepreneurship Masterclass, based on my book, as you mentioned earlier, and on my practice with business owners preparing for seven- and eight-figure exits. And not surprisingly, given this conversation, my book and the masterclass both begin with the personal side of transition planning, because it's about the owner having a transition mindset.
I spend a decent amount of time on that in the exercises, videos, and modules I've created for owners, because we need that mindset, and we need to understand the impact our tight tethering can have on ourselves, our family, and of course the business, and also how it can detract from enterprise value. If your goal is to grow the business and it's just revenue, revenue, revenue, well, maybe you can grow enterprise value without it being about top-line revenue growth. Maybe it is, maybe it's not, but you could increase value in the business without having to grow 10% per year. A lot of organic growth starts to top out, and when you're looking at options to grow, maybe double your business in two to three years, you've got to be realistic about how you're going to do that.
And by the way, most owners don't know what their business is worth. They're guessing, or they're looking on the internet, and they haven't done a full workup. That's what we tend to do as part of getting to know our clients: a decent baseline of where we are today. And part of that baselining is the owner's relationship to the company, for all the reasons we've talked about. Okay, good. So, Laurie, thanks for coming back. Appreciate it.
Listeners, take action. It's hard, okay? And you know what? We're all using AI these days, and you can go there and get a checklist of what we just talked about. Here's where you might find you're still going to need a human: it's hard to do these things, because a lot of emotional stuff gets wrapped up in them. We've found that it's easy to procrastinate, because a lot of tough decisions need to be made that involve emotions.
So, Laurie, if someone wants to contact you, how can they do that? A great way to find me is on LinkedIn; I'm on LinkedIn as Laurie Barkman. And if they want to learn more about what we do at The Business Transition Sherpa, the website is btsherpa.com. One of the resources I wanted to mention, for folks who have a firm where they think the next owner may already be in their company, is an assessment that takes only three minutes. You can find it on the site, but the URL is btsherpa.com/succession.
It's a succession assessment asking you questions about your current team members, and you can take it for multiple people, too, naming them specifically. It's a really good tool, and I hope people use it. Fantastic. And listeners, if you want help, you can contact Laurie, or you can contact us; we basically do the same things, maximizing the value of your business or planning your eventual exit from it. You can reach Walter and me at 301-859-0860 or email@ennislp.com.
We also encourage you, if you're attempting to DIY any part of your exit these days using AI, to check out our new ExitReadiness® DIY™ platform at exitreadiness.com. We built it specifically for the owner who wants to go at it themselves, at least to a certain degree, but also wants a proven framework built by Certified Exit Planners and periodic access to those Certified Exit Planners. We built it for you. Again, exitreadiness.com. As always, thank you for listening, and until next time on the ExitReadiness® PODCAST, this is Pat Ennis and Walter Deyhle signing off.
