Articles written by guest contributors
How to keep a mature business sharpBy Monroe Porter
For years, I have been talking about the 4 stages of business growth.
- Wonder – where you are just starting out and don’t know what you are doing.
- Blunder – where you have a lot of volume but little or no profits.
- Thunder – where your business is clicking along earning maximum income.
- Plunder – where the business has matured and is losing momentum and beginning to fall apart.
One morning when you’re 50 something-years-old standing in the shower at 5am prior to going to work, it comes to you. Why am I doing this? I make good money 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 are now entering the mindset of plunder.
By the way, this is not that much different from the standard mid-life emotional identify crisis and self-confidence questions many people feel as our life’s end is on the horizon. Your foremen, your postal carrier, your 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 is not the entire problem. You have 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 is too late. Then they have to pump more money into the business and make a late in life attempt to save it.
Signs of plunderHere are some signs of plunder and what to do about it.
- Don’t show too much of your wealth unless you have put someone else totally in charge and you are out the door. Blue collar workers expect the boss to have more money than them. However, if you are not around as much and flash your good life all over Facebook and with company gossip, human nature will run its course and attitudes will develop. And if the only time you show up is to bitch about production or profits, the problem gets even worse.
- Ownership or another person of upper management must physically visit jobs. Contractors make money in the field. It is a production business. If you are 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 slack on Friday afternoon.
- Give authority to someone who’s a go-getter, and develop new leaders. You have made your money and you probably are not as motivated to jump in and make an extra nickel. Find someone that is motivated 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 is also important that your new leaders are respected and seen in the field. Remember, employees are trusting your organization with their livelihood. If they do not see a future in the company, good people will leave. You will then become stuck with the people who cannot find a job anywhere else.
- Plan for your departure. Here comes the big stickler: It will take 3 to 5 years to replace the founder as the driver of the business. Unfortunately, too many owners want to work less but are not patient enough to develop someone to replace them. The urge to leave is sudden but owner replacement takes time.
When owners step back, there is 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 to come in, key customers are lost and boom, you are in a large loss situation.
- Make sure technology and equipment is kept up to date. As we grow older and looking towards retirement, replacing computer systems and trucks may not be a high priority. It can be hard to convince sharp young people there is a future in your company if technology is outdated and equipment is rag tag.
- 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 of age. The estimator was 62, the production manager 61 and the youngest project manager was 52.
In summary, it is human nature to want to cut back as we grow older and our income situation improves. Just remember business is not forgiving. Just because you don’t want to work as hard doesn’t mean competitors want to do the same.
Monroe Porter is president of PROOF Management Consultants, a company specializing in seminars, and business consulting for contractors. He is also founder of PROSULT™ Networking Groups developed to help noncompeting contractors. Call (804) 267-1688, email Monroe@Proofman.com or visit Proofman.com.