Do You Own Your Business -- or Does It Own You?
Hal looked tired. He had been working almost nonstop for a month, running between his office in Honduras, his jobs in Central America, and his second home in Canada. Tonight, he was in Delray Beach, Florida, and was talking to me about a development project in Nicaragua.
"You shouldn't be working this hard," I told him.
He agreed. But he'd been putting in these kinds of hours for more than 20 years. His business was getting bigger every year, yet he wasn't looking any better for it.
We talked about the project. He showed me his plans.
Hal is a very talented designer. He is in great demand in Central America, where his colorful, creative Caribbean-flavored designs have been very successful. And Hal is an impressive guy -- bright, articulate, accomplished.
What I most admire about him is that he changed his career about 20 years ago and started a business doing something he loved. He didn't have any preparation or education that would make it easy for him. He wasn't an architect and hadn't worked for an architectural or design business. But he woke up one day and told himself that if he wanted to be happy he needed a new career. So he got one.
In the years that have transpired since then, he has designed and built dozens of great buildings and commercial projects. With a partner, he virtually transformed a small fishing port on the Great Lakes into a thriving, upscale village.
He's done all that -- but he's still working too hard. And -- in my view, at least -- he's not making enough money.
That's what I thought -- and so that's what I told him.
"You started with nothing, and you've built so many beautiful things. You know all sorts of interesting people, have friends all over the world, and enjoy a lifestyle most people can only dream of. Your success has come from providing your clients with great value at very reasonable rates," I said.
He agreed.
"But now you have to ask yourself: 'Am I the owner of a valuable business -- or am I the most valuable and most overworked employee of a business I happen to own?'"
It hit him right between the eyes.
This is a common problem with people who start and build their own businesses. They do the heroic work of creating something out of nothing, take the financial and emotional risks of failure, work endless hours to make ends meet, and finally get to see the business grow. Only to discover -- very late in the game -- that the business isn't giving them all they had hoped for when they started out.
What do they have?
That's a lot to get in life. Hal and others in his position are better off than they would be as employees. But there are two important things they don't have:
1. more free time
2. an asset that can be sold for a great deal of money
How do you tell if you're in that same position? Answer the following questions:
1. Could you sell your business for a lot of money? Enough to retire on?
2. Could you sell it in less than a year?
3. If you decided to stop working next month, would your employees be able to run your business without you?
4. If your customers discovered that you were no longer actively working, would they continue patronizing your business?
If you answered "yes" to all of the above questions, congratulate yourself. You are the owner of a valuable business. If you answered "no" to most of them, you need to consider the advice I gave to Hal:
It is gratifying to know that your customers want you on the job -- but as long as they feel that way, you are tethered to their schedule. If you want to be able to control your own time -- to come to work when you wish, leave when the whim to do so hits you, and take long, worry-free vacations -- you must become replaceable. There is only one way to do that: Find someone who has the potential to do good work and set him on a course that will eventually lead to his replacing you as the most valuable person in the business. And don't stop when you find one superstar. Two is better. Three is heaven.
If your business is growing (like Hal's) and the need for your product gets greater every year, increase your price. It's not just a question of supply and demand. As the years have gone by, you've almost certainly improved quality. Charge for that. And, while you're at it, charge for cost-of-living increases. If you're in the service business, one thing you can do along the way is create a tiered fee structure: Charge a higher fee for your personal services, a medium fee for those of your next-in-line, and a bargain fee for the new recruits. As everyone gains experience, adjust their fees accordingly.
At present, the business may be built around you -- your personality, your predilections (see "Word to the Wise," below), and your name. Begin to change that. The goal is to transform the organization from one that is personality-based to one that is driven by systems and/or ideas. This is a difficult challenge -- perhaps the most difficult of all -- but it is essential if you want to sell your business, as a business, sometime in the future.
Today's Action Plan:
I wrote about these particular strategies in past ETRs -- and will write about them again. If you are a business owner and don't enjoy what you do, your goal, today, is to figure out whether you own a valuable business or work for one -- and, if the latter is the case, to rough out a game plan for transition based on the three strategies outlined above.
In Football or Business, Success Comes From Strong Leaders
by Charlie Byrne for Early to Rise
You probably know that the Dallas Cowboys won't be playing in the Super Bowl this weekend [from Wednesday, January 28, 2004]. But this past season, under new head coach Bill Parcells, they were transformed -- from a bunch of fourth-place losers expected to go nowhere into a 10-6 playoff team. Parcells also brought winning programs quickly to the Giants, New England, and the Jets.
In a Harvard Business Review interview, Parcells explained his three rules for turning around an organization:
1. Don't wait to earn your leadership. Establish it right away by showing that you're in charge.
"On the first day of training camp, I laid it on the line: I told everyone that losing would no longer be tolerated. Players who were contributing to the team's weak performance would be given a chance to change -- and if they didn't change, they'd be gone."
2. Confrontation is healthy. If you want to get the most out of people, you have to apply pressure.
"I've found that people like the direct approach. I have many players come back to me 10 years later and thank me for putting the pressure on them. They say what they remember most about me is one line: 'I think you're better than you think you are.'"
3. Break the losing habit. To build confidence and charge the air with success, Parcells initially sets small, easily achievable goals for his players. (This is a technique we described in Message #1039.)
"When you set small, visible goals, and people achieve them, they start to get it into their heads that they can succeed. They break the habit of losing and begin to get into the habit of winning. When we start acting in ways that fulfill these goals, I make sure everybody knows it. I accentuate the positive at every opportunity."
It's no coincidence that Parcells' teams consistently perform above outside expectations. Good organizations -- of all kinds -- begin and end with a strong leader.
It's Good to Know: How Freud Organized His Day
Sigmund Freud's biographer, Peter Gay, tells us that when Freud was in his 50s, he typically went to bed at 1 a.m., rose at 7 a.m., saw analytic patients from 8 a.m. until noon, dined with his family at 1 p.m., and then walked in the city, where he bought cigars and ran errands. He began appointments again at 3 p.m. Sometimes, he saw patients until 9 p.m. After supper, he liked to play cards, read, and write.
Word to the Wise: Predilection
"Predilection" (pred'l-EK-shun) is another word for "preference."
Example (as used in today's main message, above): "At present, the business may be built around you -- your personality, your predilections, and your name. Begin to change that."
Michael Masterson
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These articles appear courtesy of Early to Rise [Issue #1050, 01-28-04], the Internet's most popular health, wealth, and success e-zine. For a complimentary subscription, visithttp://www.earlytorise.com/.
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