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Among the common goals of members of a capitalistic economy is the creation of wealth. This is often a reason why people own businesses. For an individual, the concept of wealth creation is the escape from dependence on earning funds for current expenses to live a certain lifestyle to building up assets and resources that appreciate over time and are of a magnitude to sustain that lifestyle or a better lifestyle without the need to earn funds for current expenses. Creation of wealth is a reference to accomplishing financial independence through the creation of passive income from investments.

There is also the concept of risk involved with the creation of wealth. To be independent from the need to earn income it is ideal not be at risk for the source of that income. Risk cannot be eliminated, and the safety of certain types of passive investments can be debated; however, there is no question that an income source from a business has more risk than an income source from most passive investments. Business risk is significantly more because even over short periods of time the business arena is constantly changing, with markets evolving, management transitioning over time, and other unforeseen changes. A business which is not changing or that is making poor decisions will become unprofitable. This business risk, although variable for each business, will usually be far greater than the risk of carefully making passive investments.

For a business owner, the path to wealth creation is to transfer the value created by the profitable operation of the business from the business to the owner taking that value out of business risk. This enables the creation of wealth through the acquisition of safer passive investments that sustain a desirable lifestyle.

How does the business owner accomplish the transfer of the maximum value possible out of business risk and into personal investments at lower risk? A sale to a buyer outside the business will accomplish the maximum value transfer of value from out of the business to the business owner. The strategy to accomplish a deriving maximum value from a business through a sale to a buyer outside the business is Prior Diligence.

Prior Diligence is the basic strategy for planning to sell the business to a sophisticated buyer who will investigate the business as part of a due diligence process prior to sale. Prior Diligence places the business owner in the view of the prospective buyer and asks, “would I buy this business – if not, why not?” The business owner reviews a diligence checklist and addresses deficiencies of the business accomplishing improvements through Dynamic Planning.

The details of the Prior Diligence strategy and the Dynamic Planning method are described in the substack, Owning A Business, https://rickriebesell.substack.com. By utilizing this strategy and method the business owner can accomplish deriving maximum value from a business and transfer that value to the personal investments of the owner enabling the creation of wealth.

Traditional planning is static. If there is a written plan, we see the plan formulated, documented in writing, presented at a meeting, and then put on the shelf to be consulted for next year’s retreat. This is the opposite of a forceful and changing dynamic plan. A dynamic plan can accomplish continuous improvement in business performance over time resulting in increased profitability. How does a static plan become dynamic?

The answer is in the format of the plan. To be forceful a plan must be understood and implemented at all levels of the business – operational as well as management. The actions to realize plan goals must be monitored and the results known at all levels of the business – especially the policy-making group. A plan is dynamic when the format of the plan narrative provides complete and immediate notice of all of the following: the plan narrative, actions to be taken, results of the monitoring of those actions, and revisions to the plan.

The plan starts with the decisions of the policy-making group about strategy. The action plans are implemented by the executive officers. As the action plans are being executed, those charged with executing the action plans will change the plans to accomplish the task. The plan format should allow changes to the plan to be known at all levels of the business.

The plan experience will be evaluated, frequently by those from the policy-making group. At the highest level, the policy-making level where strategic planning is adopted, the planning does not have to be revised as much as at the operational level where action plans are being executed. It is at the operational level the planning is frequently changed, but often the changes are not documented. These informal changes are often what accomplishes the action plan, but others in the business, especially those in the policy-making group, do not know about these changes. Frequently that is because those who change the plan are not sure they have authority to change the plan but the changes are done extemporaneously to accomplish the task. These changes at the operational level should be documented on the format and encouraged. This is done with the understanding that operational adjustments often are necessary and need to be made expeditiously, but these changes also should be known by management and the policy-making group. The plan format should support the communication of these changes as they are made.

If the members of the policy-making group do not know about changes to the action plan at the operational level, their evaluation of actions taken and implementing revisions and further planning will be flawed. Those taking action should be able and required to amend the action plans. In this way, changes are communicated up and down the hierarchy of management. Moreover, changes are occurring with experience, and revisions to the plan are written coterminously with the decision to change at the operational level. Those charged with execution of action should be empowered and required to change the action planning. When this is in place, the plan becomes an effective form of communication within the business.

Planning is more than creating a plan narrative, it is providing the format for the communication of the decision-making process of the business. The constant questioning of goals, selection of actions, identification of milestones, and determining revisions should be a series of seamless, constant activity. It is this activity that will enable consistent improvement of performance over time. In business, we must establish a process to make good decisions that are documented in planning that is constantly evaluated and revised at all levels. That is the essence of excellent business performance – continuous improvement in performance over time resulting in increased profitability.

In his substack, Owning A Business, Rick Riebesell has described the implementation and execution of a dynamic planning process in a number of posts about Dynamic Planning and the Prior Diligence strategy.

Time is the progression of events from the past to the present into the future. Time marches forward relentlessly. From birth to death, we age, and every moment that passes is unique and unrepeatable. The more important tasks we accomplish within our lifespan, the more fulfilling and impactful our lives can be.

But what defines “important”? Is it happiness? Recognition? Pursuing a passion? How we define, or not define, “important” has a great deal to do with how we spend the time of our life span.

I believe in defining “important” through a written strategy. A written strategy articulates your values and what you deem important. It is a documented set of decisions about your personal vision and purpose. What constitutes a meaningful and satisfying life for you? What are your goals? And, crucially, how do you adapt your strategy as your life evolves?

Every moment spent not working towards something important feels like a loss – not in a negative way, but as a recognition of the limited time we have. We can’t avoid all “loss,” but we can maximize the time spent on what truly matters.

Without a defined strategy, we default to reacting to urgent tasks. Urgent tasks are tasks we perform when it would be more uncomfortable not to perform the tasks than to perform them. These tasks may or may not be genuinely important. Too often, the urgent displaces the important, leaving us busy but unfulfilled.

There is a way to avoid having urgent and unimportant tasks from taking time away from important tasks.

1. Define Your “Important”: Articulate a strategy rooted in your core values. What do you want to achieve? What kind of life do you want to live?
2. Plan and Schedule: Create a plan to achieve your strategic goals. Schedule time for these important tasks.
3. Guard Your Time: Don’t let urgent, less important tasks hijack the time you’ve allocated for your priorities. Learn to say “no” or delegate effectively.

This approach, applied consistently, allows you to maximize the time spent on what truly matters, leading to a more fulfilling life.

This same strategic thinking can be applied to your business. If building wealth through your business is a key goal, I invite you to explore my Substack, Owning a Business (https://rickriebesell.substack.com/). I delve into Prior Diligence, a critical strategy for maximizing the value of your business. The Substack also features a moderated chat, creating a community for business owners to connect, learn, and address the unique challenges of entrepreneurship. A well-lived life can certainly include a successful and valuable business.

Time is finite. Without a clear strategy and plan, opportunities slip away. Don’t let that happen. Take control of your time and focus on what truly matters.

In the new year make sure you pay attention to what is important but not urgent. This is the time to make resolutions – that process involving review of the past year and resolving to do something different in the new year. It is a given that urgent but not important matters often replace important but not urgent matters in the time allocation of business owners. This diverts the owners from accomplishing important long-term tasks such as obtaining maximum value for their business interests. To pay attention to what is important you must prioritize paying attention to what is important by scheduling time for that and exercising the discipline to honor the schedule.

During the scheduled time you are paying attention to what is important initially you must deal with the question of what is important? To make sure you continue to pay attention I have four more questions for you to answer in your scheduled time to pay attention to what is important.

The initial and principal question: What is important? This question is answered by creating a written strategy. A strategy is a set of choices derived from personal values that define what is important to you. A value is a normative principle that informs and shapes thoughts, desires, feelings, choices, and behavior. A value is not a preference, but an enduring and essential attribute of character. To bring clarity and order to your personal value system, you should reflect on the circumstances and experiences that have informed and shaped the your hopes, fears, and perspectives. Values define a strategy by helping to answering the question, what is desired? The product of this reflection should be memorialized in writing. In the writing, you must clarify and prioritize personal values which will suggest and frame desires. The writing should be reviewed and amended from time to time to reflect changing circumstances and perspectives. From this writing, you are prepared to articulate your values to other owners and create from that dialogue a business strategy. For a very high percentage of the owners I have known who think about strategies and have been successful, they have adopted Prior Diligence as a strategy template for accomplishing the result of realizing the highest possible value from ownership of a business interest. The components of prior diligence are: separation of the owner from management, the presence of co-owners, the implementation of a buy-sell agreement among the owners, a sale to an unrelated outside buyer, and management of the business with dynamic planning. All of these components are described with more detail in the archives of the Owning A Business substack at rickriebesell.substack.com.

The second question is: what is the essential goal to accomplish in the upcoming year based on your personal and business strategy? The correct long-term strategic planning question is what things do we need to accomplish to get what we want? The long-term goals cannot be achieved in a short period of time. You need to establish intermediate goals that can reasonably accomplished in a year or less. If your long-term goal is to sell your business for the maximum value and your are still an owner-manager, your goal for the year might be to find management replacements for your management activity.

The third question is: what actions must be taken to accomplish the goal? Whether a desired goal can be met is determined by a plan which deals with the resources available to meet the goal. Strategy answers the important desire question. Planning describes the action to be taken to accomplish the goal. If you plan first without knowing what is important, you are simply looking at the resources available and asking, what can we do with these resources? This ignores all issues of whether certain actions are appropriate or even worth consideration. This unfocused effort will not result in excellent business performance.

The fourth question is: how will you measure the progress toward the goal? What are the mileposts that should be reached each month to achieve your goal? To properly monitor the progress toward a goal, there should be points of progression or mileposts that indicate whether appropriate progress is being made. For the goal of finding employees to take over management duties that you as an owner now have, you may set milestones of writing a job description, advertising the position, conducting interviews, hiring, and training management employees to take over your current management activity.

The fifth question: if I miss a milepost, how do I efficiently revise the plan and communicate the changes? When the results are unexpected, the actions taken to meet the goal need to be revised. Delays can occur. We all know from experience that you can’t always get what you want. If the strategy is coherent, the goal will be understood, and the effort may produce the best result possible. But the ways of the world will cause things to change, and that will not only force changes in planning but perhaps changes in values and then strategy. The decision-making process is circular, and the communication of monitoring results, changing strategy, and revising plans must be continuous and communicated in a timely manner at all levels of the business. Dynamic Planning, as described and explained in the Owning A Business substack at rickriebesell.substack.com, describes a planning format to communicate effectively to all involved parties the goal and the actions to be taken to meet the goal as well as the results of those actions.

In the upcoming year, to avoid prioritizing urgent but not important matters, answer these questions. What is important? What is the essential goal to accomplish in the upcoming year? What actions must be taken to accomplish the goal? How will I measure the progress toward the goal? How do I efficiently revise and communicate the changes? At the end of the year you will look back on the accomplishment of important tasks.