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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.

As a business owner imagine how it would feel at the end of the year to look back and realize you have reached one or more important accomplishments. You used your values to create a strategy. You set a goal at the beginning of the year. You created a plan to act to accomplish the goal. You executed the plan by acting to reach the goal. The feeling would be one of satisfaction and a sense of accomplishment.

For most owners this feeling of satisfaction will not be possible. Most will not have articulated their values and created the strategy to set the goal. Some will not have published the plan so that actions were taken to reach the goal. A few will have set the goal and created a plan but not attained the goal. Those few will be able to ask the question: why did it not work out as planned? Then they will be able to revise the planning to accomplish the goal.

But for those without a plan, and especially for those without a strategy, what happens is that urgent but not important tasks have taken time and effort away from important tasks that lead to significant accomplishments. The failure to articulate values and create a strategy causes a lack of focus on what is important. The function of a strategy narrative is to define what is important. Without a plan based on that strategy to accomplish important goals, the urgent will overtake the important.

Do not let time continue to pass without defining what is important. Do not let another year go by without important accomplishments. Here is what you can do immediately to prevent that.

1. Define what is important in twenty minutes. Take no more than five minutes and a blank sheet of paper and list what is important to you. After five minutes, categorize what you have written. For example, you may have written the following list of what is important: “supporting my family, maintaining my health, contributing to the community, and leaving something behind for those who follow me.” These can be categorized into: “family, health, community, and legacy.” Now take five minutes, look at your calendar, and review the last four weeks. On a separate sheet of paper, categorize the activities and list the average hours per week you engage in the activities. For example, in an average week of 168 hours, you might spend 49 hours sleeping. You might spend 21 hours eating. You might spend 14 hours on personal hygiene and care. You might spend 40 hours working. You might spend 4 hours exercising. You might spend 4 hours running errands. This leaves 36 hours. For most of us what we do with those 36 hours is based on a sense of urgency rather than a decision about what was important. Nonetheless, categorize the activities you did for that time. Notice if any of these categories match the important categories you listed before. Start with a clean sheet and in five minutes answer the question: “What do I desire?” You should be selfish – list what you want most out of life in terms of what makes you happy or satisfied. You now have three sheets of paper and we are fifteen minutes in. One sheet lists the first important items that came to mind, one lists what you have chosen to do with your time, and one lists your desires. Is there a coherence? Do the personal values you have as to what is important match how you spend your time? Is that really what you want? A strategy helps us put these things together by documenting your careful consideration of what is important and desired to enable better day-to-day decisions about how to spend your time. In the next five minutes again write down what you think is important but also list the tasks that are required to accomplish what is important. This is a way of articulating your personal values and is a written personal strategy.

2. Relate your values and personal strategy to your business using the Prior Diligence strategy as a template. Draft a strategy for your business. Use group decision-making procedures to review the strategy with your co-owners. Agree on a business strategy with your co-owners.

3. Compute the time you have available in the average week and schedule the times you will devote to important business strategy tasks. The tasks include creating a business plan with reasonable milestones and timelines from the strategy with your co-owners.

4. Use Dynamic Planning to execute and revise the plan.

My Substack site, Owning a Business (https://rickriebesell.substack.com/) is devoted to a discussion of Prior Diligence, a strategy that is the basis for planning to accomplish 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 Substack site, Owning a Business. The chat feature of the site, which I moderate, is a place of community for business owners to learn and help others solve entrepreneurial ownership problems.

Next year be the business owner who looks back and realizes that one or more important accomplishments have been reached. You used your values to create a strategy. You set a goal at the beginning of the year. You created a plan to act to accomplish the goal. You executed the plan by acting to reach the goal. The feeling will be one of satisfaction and a sense of accomplishment.

No one said it would be easy. If you are the owner of an interest in a business which has become profitable, you and your team have done something right and it probably was not easy. Moreover, it will not be easy to keep your business profitable.

What follows is a chart for the failure rate year by year from a LendingTree analysis of U.S. Bureau of Labor Statistics data (https://www.lendingtree.com/business/small/failure-rate/).

Time Frame	Percentage of Failure
Within 1 year	23.2%
After 2 years	32.8%
After 3 years	36.2%
After 4 years	43.2%
After 5 years	48.0%
After 6 years	52.9%
After 7 years	56.6%
After 8 years	59.6%
After 9 years	62.2%
After 10 years	65.3%

The five- and 10-year business failure rates respectively are that 48.0% and 65.3% of businesses fail. So even if you survive the first years and become profitable, it does not get easier. For the continuity of a business after profitability several things should align, a group decision-making process continuing to produce good decisions, owner-managers delegating management functions more and more as the business grows, and the strategy of the owners consistently being expressed in a business plan which is executed and revised on a continuum.

The longer the business operates profitably, the more it increases in value. At the point of consistent profitability the owners’ strategy should focus beyond profitability to deriving the maximum value from the business. The wealth-building event that transfers the maximum value from the business risk of owning a business to the relatively lower risk of having that value in personal investment assets is a sale of the business to a third-party buyer.

The Prior Diligence strategy is the process a business owner utilizes for deriving maximum value from a business sale. It is the seller’s preparation for the buyer’s due diligence, which is the buyer’s investigation of the business as a part of the sale process. Prior Diligence involves planning done through group decision-making by documenting in writing the decisions of a policy-making group. The plans, strategic and operational, include the setting of goals, performance measurement, and incentive systems linked to value creation. The plans are dynamic and subject to constant revision. Prior Diligence installs processes that encourage managers and employees to act to maximize the value of the business with a philosophy of managing the business to sell the business.

There are requisite components which must be in place to derive maximum value from a business interest. The owner of the business interest must perceive and anticipate the inevitable separation of the owner from the business interest. There should be co-owners who each understand the benefits of co-ownership of a business. Majority ownership control can be maintained while obtaining the benefit of group decision-making. The value of each owner’s interest is insured by buy-sell provisions in an owner agreement. The value of a business interest owner to owner (fair value) should be understood to be different from the owner’s share of the market value of the business. To obtain maximum value for a business there must be a sale to an unrelated third-party where no owner’s participation in the business is deemed essential to the success of the business.

Accomplishing the maximum, as in being the best, is not always obtainable, but no one said it would be easy. The maximum is a worthwhile goal. What is obtained by striving for the maximum will bring better results than if the effort to obtain the maximum were not made.

No one said it would be easy. Resolve that no matter how you are separated from your business interest, the maximum possible value of that interest will go to your heirs as your legacy. If you make that resolve in good faith, you have established the first component. Keep going. If you do not have co-owners, contemplate reasonable ways to obtain co-owners without losing legal control. With your co-owners, negotiate and create a contingency succession plan with basic buy-sell provisions. Endeavor to understand and utilize the dimensions of group decision-making and how that planning activity can cause execution of planning to make the business more viable. Start discussing the value of the business and the differences that exist between the amounts owners pay one another for interests in the business and the amount an unrelated third-party might pay for the business interest.

My name is Rick Riebesell and I am principal consultant of Business Transition Consulting (https://btcllc.net) and author of the blog Business Concern (https://businessconcern.net). For a business owner wanting to implement the Prior Diligence strategy, I write a Substack called Owning a Business (https://rickriebesell.substack.com) with an archive of information about the Prior Diligence strategy and through the chat process providing a dialogue with me and other business owners about the business ownership experience. Thanks for your attention.

The idiomatic phrase – shoulda, coulda, woulda – conveys the feeling you as the owner of a business might have in three years. Ok, “Could’ve, Would’ve, Should’ve” is a Taylor Swift (and Aaron Dessner) song. But it derives from the phrase often written as “shoulda, coulda, woulda.” The combination of the meaning of each – should conveying correctness, could conveying possibility, and would conveying a thwarted intention – yields a meaning of the uselessness of looking back or looking for excuses. Pat Riley, President and former coach of the Miami Heat and the Los Angeles Lakers famously said: “There’s no such thing as coulda, shoulda, or woulda. If you shoulda and coulda, you woulda done it.”

In my experience, three years is about the time it takes to prepare a business to be sold for the highest possible price. Most business owners are so concerned with the urgent matters of the business that they fail to pay attention to the important matter of assuring that the termination of their business interest results in a wealth-building event. This important strategy, which I call Prior Diligence, can result in wealth-building results but only if it is learned and utilized. I have outlined the Prior Diligence strategy in a series of posts on Substack called Owning a Business (rickriebesell.substack.com). The sooner it is implemented, the closer the wealth-building event.

If you are the owner of a business interest in a profitable small to medium sized business, your primary concern should be to realize the maximum value from that interest. To be precise, “realize maximum value” means receiving the most net cash for that interest thereby converting the value in the business interest from a high risk business ownership to a personal asset held at a relatively low investment risk. This is when the sale of a business interest is a wealth-building event.

Think down the road three years. What would it mean to be selling your business for the maximum value? For most profitable businesses it would be a wealth-building event. Think about the businesses that you are familiar with who have not been sold for maximum value but have been the subject of disputes among the owners, had an owner essential to the business leave the business, or for one reason or another been liquidated. There is a strategy to follow that in three years will have that wealth-building event more available to you. Or in three years you will be saying: “shoulda, coulda, woulda.”