Gone in 60 seconds - gone in 60 years. I was recently talking to a manager of a small business. He told me that when the owner gets too old to run the shop he knows that the company will fold. Now this is not a small outfit. They have quite a few employees so this will be a tragedy for all of the staff and their families and will ripple out to affect the wider community for years to come. All of their past successes will be forgotten. It is said that when even a small company like a corner store closes down it actually has a million dollars impact and this one is much bigger.
As human beings we all have similar needs. We all want to live, to love and to learn. But as we grow older there is another fundamental need which becomes more apparent. We want to leave a legacy.
There are 36,000 small businesses in Tasmania. Let’s leave aside the fact that there is no agreed definition of small business. Do you define it by turnover or number of employees or some combination? It seems that nobody can agree. Let’s leave aside the “small” and look at the other word “business”.
Just because I am the director of a company and I am not working for someone else, doesn’t mean that I am actually running a business. Many small businesses start because the founder has some technical ability and decides that they want to make a go of it. But that isn’t a business – that’s a job where the idiot you call the boss is yourself.
And here’s the important point. You can’t sell a job. A job gives you income but it is not an asset. You might have 10 people working for you, or even 200, but if everything depends on you then you don’t have a business. If you get too old, too sick or too tired to carry on, then nobody will be willing to buy your so-called business or if they do they will pay you a fraction of what it is really worth. On the other hand whatever you think of their food McDonalds is one of the most successful businesses in the world and it’s largely run by 16 year olds.
A business, whatever its size, is a repeatable system. It’s a consistent process that spits out value. If the information about how it all works is inside your head it is not a system. You may know how it works but if you aren’t there then it will start to fall apart very quickly. McDonalds don’t invest in staff – they invest in the process. They make it their most important asset. When a 16 year old walks out of McDonalds it is no drama.
Now this might all seem like common sense but there are thousands of people running businesses who assume that when they retire they can sell their business or pass it on to a family member. Their business is their super. One of the impacts of the GFC is that many people deferred retirement. So around about 2018 there is going to be a crush of people wanting to sell their businesses as the baby boomers retire. Most of them will discover too late that their nest egg is worthless.
So what stops the owner of a business from doing a proper succession plan? In a year or two any small business can transform itself provided there is the will to make it happen. It’s not lack of knowledge, expertise or intelligence. It is something much simpler. When the business is your life what do you feel when it no longer revolves around you? Loss. Loss of purpose, loss of meaning, loss of respect, loss of identity, loss of self-worth. If you are no longer the person making it all happen, who are you? For many people just the thought of that sense of loss is so challenging they put it in the too hard basket and soldier on.
However little do they know that if you make a succession plan and execute it that sense of loss quickly translates into something else, something which lasts – a sense of pride. True happiness only comes when you do something that helps others. When you leave a legacy you move beyond the small world of me, myself and I, and enter a far bigger conversation, one that revolves around us.
And when that happens all the excuses that you give – nobody will do it as well as me, they aren’t ready, it’s not the right time etc. simply fade away. Because now you realise that you can control the process, determine the timing and leave on your own terms. And once you leave there is nothing to stop you going out and doing the same thing all over again if you choose!
This blog was written by Bill Aronson.