For years, I’ve been talking about the four stages of business growth. Wonder; where you’re just starting out and don’t know what you’re doing. Blunder; where you have a lot of volume but little or no profits. Thunder; where your business is clicking along earning maximum revenue. And last but not least plunder; where the business has matured and is losing momentum and beginning to fall apart.
One morning when you’re fifty something-years-old standing in the shower at 5 a.m. prior to going to work, it comes to you. Why am I doing this? I make hundreds of thousands of dollars each year and here I am still busting my butt. I have earned and deserve the right to cut back. Is this all there is to life? Congratulations, you’re now entering the mindset of plunder.
By the way, this isn’t that much different from the standard mid-life emotional identity crisis and self-confidence questions many people feel as our life’s end is on the horizon. Your foreman, postal carrier, project managers and many others go through the same feelings. The difference is that you may have the personal finances to do something about it. But money isn’t the entire problem. You’ve spent your entire life working to build your baby; your business — it’s your identity. Family and friends work for you. The last thing most entrepreneurs want is to see their creation and identity disappear when they do. Unfortunately, plunder happens slowly over time and many business owners fail to see the weakening until it’s too late. Then they have to pump more money into the business and make a late-in-life attempt to save it. Here are some signs of plunder and what to do about it.
1. Don’t show too much of your wealth unless you’ve put someone else totally in charge and you’re out the door.
Blue collar workers expect the boss to have more money than them. However, if you’re not around as much and flash your good life all over Facebook and with company gossip, human nature will run its course. If you’re off playing, the company must be being doing great. And if the only time you show up is to complain about production or profits, the problem gets even worse.
2. Ownership or another person of upper management must physically visit jobs.
Contractors make money in the field, it’s a production business. If you’re not interested enough in your money to show up and see what’s happening on the jobs, why should your employees care? Show me a business where the boss plays golf every Friday afternoon and I will show you a business where people are slacking on Friday afternoon.
3. Give someone that’s hungry authority and develop new leaders.
You’ve made your money and you probably aren’t as motivated to jump in and make an extra nickel. Find someone that is and put them in charge. This may or may not be one of your children. It can be difficult for an affluent child to be scared financially, most have never used their credit card to make payroll. It’s also important that your new leaders are respected and seen in the field. Remember, employees are trusting your organization with their livelihood. If they don’t see a future in the company, good people will leave. You’ll then become stuck with the people who cannot find a job anywhere else.
4. Plan for your departure.
Here comes the big stickler. It will take three to five years to replace the founder as the driver of the business. Unfortunately, too many owners want to work less but aren’t patient enough to develop someone to replace them. The urge to leave is sudden but owner replacement takes time. When owners step back, there’s an immediate leadership void and the company gradually loses momentum. This decline can be very subtle as the company will probably continue just fine for a while. Then key people leave, jobs start not coming in, key customers are lost and boom: you’re in a large loss situation.
5. Keep technology and equipment current.
As we grow older and are looking towards retirement, replacing computer systems and trucks may not be a high priority. It can be hard to convince sharp young people there’s a future in your company if technology is outdated and equipment is ragtag.
6. Invest in your up and coming employees.
As ownership ages, so do key managers and personnel. A few years ago, I was hired by a successor to help turn a company around. The successor was 41 years old. The estimator was 62, the production manager 61 and the youngest project manager was 52. It was amazing that during a company planning session, no one but the successor saw this as an issue. Start with a meeting of management. Assign teams or committees of up-and-coming people to do things like research software, and improve processes. In 60-90 days, have them publicly present their findings to the company. Continue this process for a year or two and see who emerges as leaders.
In summary, it’s human nature to want to cut back as we grow older and our income situation improves. Just remember business isn’t forgiving. Just because you don’t want to work as hard doesn’t mean competitors want to do the same.