An absentee owner is just what it sounds like – someone who owns a business and rarely if ever goes to or actively runs the business. There are variations on those terms but you get a general idea. The real question is – Is it a good idea?
Mostly, your business is on auto-pilot or someone else is running the day-to-day.
Absentee Owner – Can it be done?
Hell, we put a man on the moon, so you should be able to be an absentee owner. Well, it is not that simple.
There are some businesses you can buy that would be easier to run absentee. Some internet businesses kind of run on autopilot and don’t take a lot of time. I sold t-shirts on Amazon while I had a full-time job and it was easy to manage.
If you’re talking about buying a business with employees, a location, and other things that come with a traditional business, it may be a little more difficult but it is possible. For it to work you will need most of these things:
- A great manager – And by great, I mean someone you can trust to run the business, won’t steal from you, and is willing to stay with the business for an extended time. If you find that person, you may want to consider giving them a small piece of the business.
- Great procedures – You will need to have really tight processes and procedures to keep the trains running on time. Payroll, scheduling, inventory, and software are a few things that come to mind.
- Flexibility – No matter if you have the first two items, there may be times in which you have to take control for a while. That great manager quit and now you have to step in. You have to be able to do that or you could lose your business.
- Trust – From my experience, it is not that easy to find people to trust when money is involved.
- Cash – It is also easier to be absentee if the business does not involve a bunch of cash. I owned a nightclub once and had to always be around because it generated a bunch of cash that was difficult to keep an eye on.
Why it is a bad idea to be an absentee owner
- Decreased control and oversight – When you’re not physically present to oversee the day-to-day operations of your business, you’re essentially relinquishing control to your employees. This can result in decreased quality control, mismanagement of resources, and potentially even fraud or theft.
- Missed opportunities for growth – As an absentee owner, you’re less likely to be in tune with industry trends and market opportunities. This means you may miss out on potential growth opportunities for your business, such as new product lines, partnerships, or marketing strategies.
- Communication breakdown – Communication is key to any successful business. But when you’re not present to communicate with your employees, it can lead to misunderstandings, miscommunications, and a breakdown in trust. This can also result in decreased employee morale and motivation. Your business is only as strong as your employees.
- Lack of leadership and direction – When you’re not physically present to lead and guide your team, it can create a lack of direction and purpose within your business. This can lead to a lack of motivation and drive among employees, resulting in decreased productivity and profits.
- Legal and financial risks – As an absentee owner, you may not be aware of important legal and financial issues facing your business. If you have a manager that is somewhat shady, they may not tell you if they have made a big mistake or run the business into trouble.
Is it a good idea to be an absentee owner
In my not-so-humble opinion, I do not think it is a good idea and I would never consider it. If I am going to go out and take control of my future by buying a business, I want to be there day-to-day. Despite what anyone tells you, employees will never care as much about a business as the owner does.
Pro Tip – Be very skeptical if a seller tells you that it can be run absentee.
Almost every time someone has told me a business has an absentee owner, they really have a relative (son, daughter, wife, husband, or talented dog) running the show. And chances are those people will not stay around when you buy the business.
I once owned a nightclub and if I left it in the hands of the manager, it would have failed in a month. There was too much cash in the business and that can be tempting to many people.
Go deeper
There are not a lot of books on this topic but this is one of the better ones. The Lifestyle Business Owner is written by an author who owns several multi-million dollar companies that he says run without the owner. If you are thinking about being an absentee owner, this book can help you.
Click on the book image to learn more.
The bottom line on being an absentee owner
Can it be done – yes, is it generally a good idea – Probably not.
It is challenging running a new business if you are actually there, it becomes difficult if you are not present. If you are going to buy a business, you should plan to run it. Maybe later when you figure things out, you can take a step back and become an absentee owner.
Now, go out there and take over the world.
