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The Value of Separating Your Identity from Your Business
Entrepreneurs are very predictable.
We follow the same patterns and tend to lean into similar strengths and weaknesses. The drive to succeed and the grit that leads to hours and hours of time invested in our business with no immediate payoff. The naive optimism that keeps us focused on winning despite the odds. The control freak tendencies. The general insanity that leads us to believe that we're better off forging our own path rather than conform to the template we're handed by society.
One pattern I've noticed throughout my career is the entrepreneur's tendency to tightly integrate their identity with their business to the point where there is very little to no distinction. Having been a business owner since 1996, I've done the same thing. We all do at first.
I used my business email address as my primary email (for a long time I didn't even have a personal email address). I used my business calendar as my primary calendar. I worked long hours at my business and considered it my primary focus.
If my business received criticism, I took it personally. Every client complaint or team member failure or bad decision left me feeling like a failure because I was my business. My identity and my self-worth was based on how well my business was doing.
My identity was so intertwined with my business that I really couldn't point to where my business ended and my personal life began. There was no difference.
As you might expect, this was not necessarily great for my stress level and emotional state. For the better part of two decades, this was the norm for me.
I'm not sure what shifted or why, but after two decades of owning my business (a digital marketing agency at the time), I began to see things differently. The driving factor was that for the first time ever, I was seriously considering selling my business. Well, technically it was the second time ever but this time the path was more realistic.
I began to see that by wrapping my identity up so tightly in my business, I was limiting my potential. I was spending so mental energy being inside my business that I couldn't see it from an objective view.
In order to get my business ready to sell, I had to make some changes. I had to separate myself from it from both an operational and a personal standpoint. I had to make myself operationally irrelevant to facilitate a successful acquisition.
While this was happening, I was forced to redefine my identity without my business. And it was scary.
I started using my personal email account as my primary email. I switched over to my personal Google calendar as my primary master calendar and moved my other businesses (which I had started along the way) into it. I mentally separated myself from my business and started to think of it as an asset, rather than a piece of my soul.
After the sale of my business, things got even clearer. While it was a bit emotional and scary, that soon turned into a new perspective. In years prior to the acquisition, I was ramping up my career in financial services and three months after the sale I launched Elevation Financial.
So what have I learned from all this? I believe more than ever that there is great practical value in separating your identity from your business. Here's why.
It's emotionally healthier
If you were nodding your head while listening to my tale of woe in which I described how wrapped up in my business I was, then you know the emotional toll it can take on you. It's exhausting. And it's hard to see it at the time.
After all, we're entrepreneurs! We hustle and work and work and hustle and we're so busy with the work and the hustle that we are sometime oblivious to the fact that we no longer have an identity outside of our business.
Since gaining new perspective on this, I've been much happier by thinking of my businesses as distinct entities that I manage and work on, but are not who I am.
By thinking of my businesses as assets (like my house or my investments), I am able to be more objective, make better decisions, and plan my future better.
Does this mean I live life in a zen-like state of perfect objectivity and serenity while running well-oiled businesses that never stress me out? Not quite. I still take things personally sometimes. I still get stressed. I still find myself attaching too many emotions to a business issue.
But it's a lot different now. If my previous level of business co-dependance was a 9, it's now a 3 or less.
It can increases the value of of your business (and your net worth)
When you are so deep inside your business that you are the heart and soul of it, it's hard to step back and get a sense of the true value of your business. The more attached you are to your business and the more operationally necessary you are, the more you think your business is worth. Ironically, this is the very thing that can make it worth less (more on that later).
If you start to think of your business as an asset that you manage, you start to focus on ways to make it more valuable. You are then able to place it on your personal balance sheet along with your home, your investments, your bank accounts, your vehicles and anything else you own that has value.
This doesn't mean that you treat it like a spreadsheet. You are still able to pour energy into it and have fun doing what you do. You still inject warmth and personality into your business. You still have a human "why" behind your business.
But you don't let it own you. It belongs on your personal statement of net worth as an asset. And when you think of it this way, you start to make decisions differently, which can increase the value of your business and therefore your net worth. Which leads us to...
It's easier to sell
Remember: the more attached you are to your business and the more operationally necessary you are, the more you think your business is worth. Ironically, this is the very thing that can make it worth less.
When your business feels like part of your soul, you're likely to severely over-estimate its value. By tightly integrating yourself into the business operationally and emotionally (they typically go hand in hand) you make it more difficult for a buyer to see value. They could acquire you along with the business but this rarely works out and experienced buyers know this.
They could acquire the business while you exit but this makes it difficult to maintain and grow the business because you were so intertwined in the operations.
A business has the most value when the owner is operationally irrelevant or at least minimally relevant, and there are enough systems in place that consistent revenue still flows without the owner.
In case you are bristling at the thought of being "operationally irrelevant," it's not a negative thing. It's actually quite wonderful. Having become an operationally irrelevant owner more than once, I can tell you that it's a great place to be because you can take a different perspective on your business. You will likely enjoy your business more and you get to work on strategic vision as opposed to spending all your time putting out fires. We should all be so lucky!
So as you chart your own path as an entrepreneur, I encourage you to think about how emotionally (and as a side effect, operationally) intertwined you are with your business.
Rather than thinking of your business as a part of you or attaching your identity to it, I would encourage you to try a different perspective and think of it as an asset to manage. It may be emotionally healthier, it may increase the value of your business and it may make it easier to sell if you so choose.
And you may even start to love your business more than ever.