From: http://www.bizjournals.com/

Want to transform your business? Then be relentless about reducing your own direct labor.

Does that mean you should abdicate your production work or front-line supervision and be an absentee owner? That you should never get your hands dirty? Of course not.

It’s OK to work. You just don’t want to design your company so that production depends on your direct labor or front-line supervision.

One of the biggest objections I hear from business owners is “Ingar, I love what I do! Why would I stop doing it if it’s my own business?”

The problem is that they didn’t understand my point.

If you want to get involved in those things, that’s great. The point is that there’s a difference between wanting to — and having no choice.

If you’re getting involved because you want to, it can lead to a scalable, sustainable business that gives you quality of life and a business that’s worth a fortune when you sell it.

But if production depends on you being involved, that can negatively affect the following:

1. Flexibility

Taking time off is challenging, whether it’s for emergencies, family events, vacation, or other reasons. I’ve met plenty of business owners who say they don’t care about time off, but handling emergencies is a different matter.

As your parents or in-laws get older, or if you have children living at home, you’re probably going to have hospital visits. If your business suffers when you take more than a few days off, then you don’t really own a business. You own a glorified job.

2. Company value

To analysts conducting due diligence, if your direct labor is required for production, it’s a red flag. It’s a common problem, but a potential acquirer has to price the risk of you staying alive, engaged, and loyal in the valuation of your business. It will be discounted appropriately.

3. Scalability

You’re probably a choke point in your business, and that unnecessary constraint means that your capacity — labor, capital equipment, and so on — is underutilized. You just can’t produce enough throughput to generate enough cash from your capacity. Not only that, but every second you spend on production is a second you don’t have for creativity, leadership, and business development or marketing.

4. Sustainability

If the company can’t operate without you, then part of your strategy is hope: the hope that you won’t be hospitalized for an extended period. Sure, you can take care of yourself with long-term disability insurance, but that doesn’t keep your business running, let alone growing.

5. Freedom

Many business owners will brag about the hours they keep and how they wouldn’t want it any other way. But the story often changes after a couple of beers (or a couple of hours of talking). Most actually don’t like all the hours. They don’t like working vacations, they hate the term “quality family time” (as opposed to quantity family time), and they occasionally feel like a prisoner to their businesses. They didn’t start the business to get into a trap of their own making; they were usually looking for independence and freedom.

You can take my poll on this very topic. Do you feel that you may be causing your business problems in any of the above areas?

Bottom line: be relentless about reducing your company’s dependence on you, and begin reaping the rewards.