Keep Working in It, Sell It, or Let Someone Else Run It. Pick One.

The Short Version: Every business owner has three options. Keep working in it, sell it, or own it while someone else runs it. Two of those, selling and stepping back into ownership, need a business that doesn't need you on the day you want to leave. Building that takes years, typically three to five. So owners who never actually choose end up with the first option by default, usually while telling themselves they're heading for one of the others. Keeping on working in the business is a perfectly good choice. The trouble starts when it isn't a choice at all.

What this post covers:

• The three options, and the question that shows which one you're really on
• Why so many owners drift into the first one without deciding
• What a buyer is paying for, and what they quietly discount
• Handing the business to your team or your family, and where it snags
• Owning a business you don't work in, and why that can feel like guilt
• Why the right time to start is earlier than feels necessary

If you put a hundred thousand pounds into a listed company, would you go and work there to collect your dividend?

I asked an owner that last month. Put that way, the answer is obvious. You wouldn't set foot in the place. You'd expect the people running it to run it, and you'd still expect your dividend.

So why does it feel so different when the company is your own?

That question sits under nearly every conversation I have about where a business is going. In September alone, owner after owner brought it up, often before I'd asked.

Three Options, One Question

There are three ways to own a business. You keep working in it. You sell it. Or you take the rewards from what you've built and let someone else run it.

That's the whole menu. Every plan I hear, retiring, handing to the kids, a management buyout, easing off a bit, is one of those three or a blend of them. There is a fourth, closing it, and for some owners that's the right answer. But it's rarely a choice. It's usually what the first option turns into when something forces the owner out before the business is ready.

Here's what the dividend question exposes. Options two and three have exactly the same requirement. A buyer is paying for a business that keeps earning after you've gone. An owner who wants to take dividends without turning up needs the same thing. Both need a business that doesn't need you on the day you want to leave.

Option one has no such requirement. Which is why it's where you end up if you never pick.

And option one is fine. I'll be honest about my own position. I could take long weekends and mostly don't, because I'm a bit of a workaholic. I have two coaches, and they ask me the same question every time: are you working the plan? I've chosen to keep working. That's allowed.

What causes the damage is planning to sell, or planning to step back, while running a business that needs you a little more every year.

The bottom line: There are three ways to own a business. Two of them need the business to run without you. The third is what you get if you don't choose.

Why the Default Wins

Nobody decides to drift. They defer. And the deferrals are reasonable, which is exactly why they work so well.

One owner I called in September is thinking about stepping back, with his son possibly taking over. Money isn't the obstacle, he told me. Working out how to do it, and what's left for him afterwards, is. It was all still being talked through and he asked me to ring back in a year. He'd told me much the same thing in March.

Another owner had hoped to be easing off by now. He wants a new software system bedded in first, and then he'll look at his management team. After Christmas, probably. He was candid that he was pushing it down the road.

Neither of them is wrong about the software or the family conversation. Both are real. But look at what's happening underneath. Each deferral is a few months. Stack three or four of them and a five year runway becomes a two year one, and the options narrow without anybody ever choosing to narrow them.

The work that makes options two and three possible is slow. A team that runs the day. Sales that don't depend on you. Customer relationships that belong to the business rather than to you personally. None of that starts when you decide to leave. It has to be finished by then.

And option one doesn't last forever. It lasts until health, energy or the market makes the decision instead, and by then the choice is a rushed sale or a closed door.

The bottom line: Deferral is how the default wins. Every "let's see where we are in the new year" is a decision to stay on option one for another year.

Selling It: What a Buyer Is Actually Buying

A buyer pays for the profit your business will make after you've left. Almost everything in due diligence is them working out how likely that profit is to turn up.

Menzies, the accountancy and advisory firm, set this out clearly in their exit planning white paper this year. They put overreliance on founders alongside weak reporting and poor tax structures as the issues that unsettle buyers, drag out due diligence, lengthen the handover and can reduce the valuation. Their sale ready checklist asks whether known risks, customer and supplier concentration among them, have been dealt with. An owner the business can't run without is the same kind of risk, sitting in the same column.

I saw what that looks like from the other side of the table last month. A building services business had recently changed hands, sold by its founder to one of his own team. The founder had kept the electrical side of the work close. The subcontractors were his relationships, some of them going back decades, and a younger electrician had been kept at arm's length for years.

Since the sale, the new owner has had to build those relationships for himself. To his credit, he has. That younger electrician is now on bigger jobs and flying.

But notice what was actually bought. Part of that business was the founder's contacts, and they didn't come with the keys. It's the relationship dependency I wrote about in You Can't Document Your Way Out of This One, turning up at the one moment it matters most.

The bottom line: A buyer pays for what keeps working after you leave. Anything that only works because of you is either discounted or has to be rebuilt by whoever comes next.

Handing It On

Passing the business to your team or your family feels like the gentler route. It runs into the same wall, and then a second one. Money.

An owner I spoke to in September had just come back from nearly three months away. The team had kept things running so well that, by his account, they were a bit disappointed to see him back. They ask him fewer questions every month. That's a genuine achievement and he's right to be pleased with it.

But the business hadn't grown while he was gone, and he knew why. The people he has are very good at doing the work. None of them sells.

His thinking now is to hand the business to a couple of his managers and perhaps rent them the premises. A management buyout probably won't happen, he said, because none of them has the money.

That's a very common shape. The running has transferred. The selling hasn't. And the ownership still needs a way to be paid for.

Menzies make the point that in many management buyouts a large part of the price is paid later, out of the business, which leaves the seller carrying the risk if it underperforms. So a team without money can still buy a business. But only one that reliably makes a profit without the person being bought out. Including the sales.

Family runs into a version of the same thing. The owner whose son may take over told me funds weren't the problem. Deciding how was. That's honest, and it's the hard part. A successor needs years alongside you, carrying real responsibility, before a handover means anything. When the next generation arrives without the skills or the appetite, the usual cause is that nobody gave them the years.

The bottom line: Handing on to your team or your family needs everything a buyer needs, plus a way to pay for it. A team that runs the day without you is half the job. The half that brings the work in is the other.

Owning It While Someone Else Runs It

Back to the dividend question, because of what came after it.

The owner I asked understands it completely, in his head. That's what a shareholding is. His gut says otherwise. Taking money out without working there would feel like leaving people to struggle, because the business isn't yet at the stage where it looks after itself.

I think his gut is right, and I think it's telling him something more useful than guilt. It's telling him the business isn't ready yet. He then reached the practical test himself. The business already pays someone for every job being done today. Could it pay someone else to do his, and still pay everything else? When the answer is yes, taking a dividend is simply what owners do. Until then, he's still one of the staff, whatever the share certificate says.

Sara Davies MBE told the room at BizX in April about another side of this option. About ten years into Crafter's Companion she sold a quarter of the business to a private investor and never asked him what his exit plan was. Years later he accepted an offer worth several times his money, and she found herself with a private equity firm as a shareholder instead of the person she'd chosen. These days she holds stakes in a lot of companies, and is having the awkward conversations about how she ever gets out. Her advice to the room was to plan the exit before you plan anything else.

Owning without running is a real exit, and it needs its own plan. Who runs it. What they're paid. What you're paid. And how you eventually get out.

The bottom line: Taking a dividend from a business you don't work in is what a shareholding is for. If it feels like abandoning people, that feeling is usually accurate information about the business rather than about you.

When to Start

Menzies put the preparation for a sale at three to five years before you intend to leave. That matches what I see for stepping back into ownership, too. It rarely happens faster, and plenty of businesses take longer.

Work that backwards. If you want a real choice in five years' time, you're already inside the window. If it's three, you're late, and the choice may already be narrowing.

Where to start is simpler than it sounds.

Pick one. Actually decide which of the three you want, and write it down with a rough date. Keeping on working in it counts, as long as you've chosen it.

Then test the business against that choice. Could it run for a quarter without you? Would new work keep coming in? Whose relationship are your biggest customers really on?

Then start with whatever takes longest. That's usually sales and relationships, and it's rarely the paperwork.

And have someone ask you the question every month. Mine asks whether I'm working the plan. It's an irritating question, and a useful one.

The bottom line: The work that makes selling or stepping back possible takes years. If your plan is five years out, it should already have started.

Frequently Asked Questions

How long does it take to get a business ready to sell? Longer than owners expect. Menzies suggest starting three to five years before an intended exit, and in my experience the slowest part is reducing how much the business depends on you, particularly for sales and customer relationships. Tidying the accounts takes months. Replacing yourself takes years.

Can my management team buy the business if they don't have the money? Often, yes. Many management buyouts are funded partly by the seller, with a price agreed up front and paid over several years out of the profits the business makes. That leaves the seller carrying risk if the business struggles after the sale. So the real question is less whether the team has money and more whether the business makes a reliable profit without you, including winning new work.

Can I take an income from my business without working in it? Yes. That's what owning shares is. The practical test is whether the business can pay someone else to do the job you do now and still pay you a dividend. If it can, you have a genuine choice. If it can't yet, the gap tells you exactly what needs building, which is usually a manager who can run the day and a sales function that doesn't lean on you.

Key Takeaways

• An owner has three options: keep working in it, sell it, or own it while someone else runs it.
• Selling and stepping back both need a business that runs without you on the day you want to leave.
• Keeping on working in the business is a perfectly good choice when it's made deliberately.
• Owners who never choose end up there by default, usually while believing they're heading somewhere else.
• A buyer pays for what keeps working after you've gone, and discounts what doesn't.
• Teams and families can take over, but the business has to make its profit, sales included, without you first.
• Guilt about taking a dividend is often an accurate reading that the business isn't ready yet.
• The preparation takes three to five years, so the time to start is now.

If you're not sure which of the three you're actually on, that's worth settling before anything else.

The Leadership Compass takes about three minutes and shows you where the business still leans on you: https://sean-ljbifr8u.scoreapp.com

If you'd rather talk it through, half an hour on which of the three you want usually makes the next step obvious.