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Why delegating authority increases your company’s value

- John Mickelson, Managing Partner Midwest Growth Partners, is IowaBiz's blogger on succession planning. Read more about him here. 

Many business owners have a difficult time delegating authority.  Fear of losing control, believing that they are best for the task, and a lack of time to adequately explain what needs to be done are all reasons not to delegate. In a perverse sense, many of these traits are what made them successful in the first place. 

However, all business owners will hit a point that in order to grow or transition ownership to the next generation, they need help. Finding and trusting employees who can carry out critical functions will allow for that growth. 

As a potential business buyer, Midwest Growth Partners likes to ask if business owners are able to leave their business for two weeks and not be needed. If the answer is yes, this shows the business is not built on one person. We find tremendous value in that and in turn businesses receive better valuations because less risk is associated with the business. 

We have seen several trends for business owners who delegate successfully including setting clear expectations for employees, letting employees know how they will be evaluated, that it is OK to make occasional mistakes, and then properly rewarding employees for outstanding performance.  

The most important thing though is giving your employees the authority required to do the job. Delegation is not really occurring if the employee has to check in with the business owner before they make a decision. 

Delegating authority can have a great impact on a business. It can also make the life of a business owner less stressful. Although it can be hard to give up some control of the business that you started, the potential rewards are worth it. 

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