As business owners, we’re faced with choices daily—some big, some small, but all requiring our attention. The key to keeping your business moving in the right direction is learning how to prioritize these decisions. I like to think of this process in terms of two categories: electives and essentials.
Essentials: The Non-Negotiables
Essentials are the decisions that affect the very foundation of your business. These are the critical operations, the cash flow, the team, customer focus, payroll—things that, if neglected, could cause immediate damage to your business. These are the must-dos. Just like how you wouldn’t skip paying your electric bill at home, you can’t skip these essential elements without risking the survival of your company.
When you’re deciding between options, always ask, “What’s critical for survival?” Whether it’s meeting managing your cash flow or maintaining key supplier relationships, these essentials must always come first.
Electives: The Nice-to-Haves
Electives, on the other hand, are things that add value but aren’t urgent. Think of these as the bells and whistles of your business. New technology, marketing campaigns, or even a potential expansion fall into this category. These decisions might improve efficiency or make things more attractive to your customers, but they’re not essential to the day-to-day operation—at least not immediately.
The challenge with electives is that they can be tempting. It’s easy to be drawn to the flashy new marketing trend or that shiny piece of software. However, you must always measure whether these electives are improving the essentials before diverting resources.
Prioritization: The 80/20 Rule
In my experience, using the 80/20 rule can guide how you balance these two types of decisions. Roughly 80% of your results will come from focusing on 20% of the most critical activities. These essentials need your focus, especially when times are tough.
Evaluate your choices by asking, “Will this improve our essential operations, or is it just a nice-to-have?” If the answer is the latter, it may not need immediate attention.
Preparing Your Business for Sale: Prioritizing for Maximum Value
When preparing your business for sale, the distinction between electives and essentials becomes even more critical. Buyers are looking for businesses that are strong in the essentials—consistent cash flow, solid customer relationships, efficient operations, and a well-trained team. These are the pillars that make your business attractive and valuable.
At this stage, focusing on the essentials not only secures the day-to-day but also demonstrates to potential buyers that your business is built on a solid foundation. For example, ensuring your financials are clean, your processes are well-documented, and your customer base is stable will make your business far more appealing to a buyer than adding the latest elective marketing tactic.
However, don’t neglect electives entirely. Strategic electives, such as improving operational efficiency or enhancing customer experience, can increase the business’s value in the eyes of a buyer. The key is to choose electives that align with the essentials and amplify what makes your business strong, rather than distracting from it.
In short, a buyer wants to see a business where the essentials are rock-solid and the electives add value without adding complexity.
Striking a Balance
The magic happens when you can strategically mix the electives with the essentials. Those elective decisions often bring innovation and long-term growth, but you can’t let them consume your attention at the expense of what’s critical for keeping the doors open today.
Just like in life, in business, the electives can make it enjoyable and exciting, but the essentials are what keep you going.
Takeaway
By focusing on essentials first and adding electives as resources allow, you’ll create a business that not only survives but thrives. The discipline to prioritize wisely is one of the best skills a business owner can develop, especially if you’re planning to sell.
Remember, not all decisions are created equal, and recognizing the difference between what’s essential and what’s elective can be the key to long-term success and a lucrative sale when the time is right.
I help entrepreneurs buy and sell remarkable businesses as well as help them plan their exits. If you would like to learn more about how much your company is worth and/or how to maximize the value of your business at exit, Click Here to schedule an introductory call with me or feel free to email me dave.godwin@cbiteam.com. I will help you discover how to find out if it’s the right time to exit and help you ask a higher selling price for your business. All information is managed in the strictest of confidentiality.
