Entrepreneurial Businesses: Why 'Alligators' Never Swim Away Unprovoked
Years ago, Tom and Jessica LaRoque, (fictional) owners of TJL Temps, a company that provided temporary workers across various industries, met with an advisor that came highly recommended. Before they even introduced themselves, Tom said to this advisor,
“I heard you can help us sell our business, and we need to sell it before it kills the both of us.”
At first, this experienced Exit Planning advisor assumed that TJL Temps was failing, but quickly learned that TJL was not only successful but also provided the LaRoques with about $250,000 in annual income and had been doing so for several years. TJL was a “lifestyle business,” but the problem was that after working an average of 60 hours per week (often more), Tom and Jessica had no time to enjoy the lifestyle that their business would have otherwise allowed. When weekends rolled around, Tom (65) and Jessica (66) were just too tired to enjoy them.
Tom explained why they were burned out: All marketing, sales, interviewing, and staff hiring and firing duties fell to him, while Jessica acted as the company’s non-official CPA, customer service department, and handled everything else Tom couldn’t make time for. They ended most weeks far behind the schedules they’d set. Not surprisingly, growth was stagnant. The LaRoques could barely handle the customers they had, let alone new ones.
After a quick review, their advisor discovered that the LaRoques’ non-business assets could not provide the $250,000-a-year income they wanted. If they wanted that income, they would have to continue sacrificing all their time. Without the business, the LaRoques could theoretically enjoy the lifestyle they desired, but only until the money they had saved up ran out. This is a conundrum many owners of good businesses face when they begin thinking about their business exits.
Finally, the less evident problem (at least to Tom and Jessica) was that without their involvement, TJL Temps was worth little. The LaRoques were the business. In order to sell the business successfully, they had to make some changes.
The LaRoques’ Exit Planning Advisor asked a simple question: “What can you tell me about your management team?”
“We hired a manager a few years ago, but it didn’t work out,” Jessica said. “It’s just easier for us to do it ourselves. Besides, we’re too busy putting out fires to train somebody.”
For years, owners have put off training management to take over because they’re “too busy putting out fires.”
“Tom, Jessica,” their advisor said, “the only way to sell your business for the money you want is to keep it and grow it until you can sell it for the money you need. It’s obvious that you can’t manage this business by yourselves anymore, and frankly, you haven’t been able to for a few years now.”
Tom and Jessica nodded as the conversation continued.
“Fires will never stop popping up, and the alligators that prevent you from draining the swamp won’t ever go away. The only way to move toward the exit you want is to change what you two are doing. You’ve got to hire top-level management to put out the fires and fight with the alligators so you can have the time to do what you want, in and outside of the business.”
That’s the rub with entrepreneurial businesses: The alligators never swim away unprovoked. They never waddle to the shore to allow owners to drain their swamps without an owner taking action. The only way for owners to hold the alligators back and avoid becoming their next meal is to hire someone to deal with the beasts.
Hiring great managers lets owners snatch their lives back from the alligators’ jaws. It lets them finally begin to do what they do best instead of forcing them to do everything. It gives owners the time and energy to begin to do what they need to do to develop and grow their companies rather than forcing them to fight every battle.
As owners hire management, their role in their business will change. As Peter Drucker observed,
Long before the time has come at which management by one person no longer works and becomes mismanagement, that one person also has to start learning how to work with colleagues, has to learn to trust people, yet also how to hold them accountable. The founder has to learn to become the leader of a team rather than a “star” with “helpers.” Building a top management team may be the single most important step toward entrepreneurial management in the new venture. It is only the first step, however, for the founders themselves, who then have to think through what their own future is to be1.
Recall Jeff Bezos and the three frogs from last week’s post. Bezos isn’t writing code, developing marketing materials, or doing inventory; other Amazon employees are. Bezos doesn’t oversee operations or manage those employees; his top-flight managers do. Because he’s acted on his need to improve his business (unlike those three lazy frogs), Bezos has time to set goals and act to achieve them. He doesn’t have to do it all, and that makes all the difference.
All successful business owners are busy. But if your clients think that they’re too busy to plan, much less act on their plan, be sure to ask them, “When will you be less busy?” More specifically, ask, “Are you too busy to plan for the most significant financial decision of your life?”
It’s rare to find a business owner who became less busy without jumping off the log, hiring others to assume their current and future tasks, and changing their roles. Failure to do so will stunt or even destroy their businesses.
Unfortunately, Tom and Jessica didn’t have the stamina to heed the advice. They were too burned out to manage the business for the several years it would take to find and train managers to assume all their responsibilities. Instead, they sold TJL for pennies on the dollar within six months of that initial meeting. They didn’t get to benefit from their lives’ work. They walked away with far too little in exchange for the lives they’d spent valiantly wrestling alligators.
This fate is common for many hardworking owners who fail to jump off the log. Exit Planning is the blueprint owners (and their advisors) create to avoid that fate.
NBA Player Carl Landry Demonstrates the Value of Persistence in Life and Work
Written by: Jon Sabes
When you meet Carl Landry, stand-out college basketball player and nine-year NBA player, you imagine that becoming a professional basketball star was a straight forward run for the 6-foot-nine-inch power forward.
However, when you go deeper into Carl’s background, becoming a NBA professional was less than certain and little came easily to the 33-year-old from Milwaukee:
- He was cut from his high school team as a freshman and averaged less than ten points a game when he did play as a senior.
- He started his college career not at Purdue, but a junior college where it was not clear he would play.
- When he finally got to Purdue, he tore his ACL in his knee his first year and reinjured it the next year.
- While his family held a party for him the night of the NBA draft, he slept in the Philadelphia airport after missing a flight following a workout for the 76ers.
- In the NBA playoffs, Carl had a tooth knocked out, but came back in the same game to make a game-winning blocked shot as the Rockets beat the Utah Jazz 94-92.
Landry, who I interviewed on my podcast, Innovating Life with Jon Sabes (www.jonsabes.com), is a remarkable example of the value of “persistence.” In a time where technology creates the image that anything is possible at the touch of a button, persistence is an under-appreciated trait. When I spoke with Carl, I clearly saw someone for whom success has only come through a force of will that made him a NBA player, but it also made him a better player every year he played. That’s the kind of personality that has produced greatness in business as well as sports.
Carl was, in fact, drafted that night he spent in the airport. The Seattle Supersonics chose him as the 31st overall pick and then traded him to the Houston Rockets where he rode the bench for much of the first half of the season. When All-Star teammate Yao Ming was injured, he stepped in and played a key role in the Rockets astonishing 22-game winning streak (the third longest streak in NBA history). And, that season, after sitting on the bench for 33 of the first 36 games, he was named to the All-Rookie second team.
Carl was the first in his family to go to college. “I told myself that this was my ticket out, so I did everything I possibly could to be the best person in school and also on the court,” he said.
His family life in Milwaukee showed him what he didn’t want to do. “Just being honest with you, seeing some my cousins, peers, they went to work for jobs paying six, seven dollars an hour or they didn’t go to work at all and then living off welfare. I didn’t want that.”
When he was first injured, he had to contemplate the end of a career before it even got started. “When you have an ACL tear, it’s over…no more basketball,” he told me. “I said, God, give me health again and I’ll do everything I can to leave it all out on the line and be a successful individual.”
On my podcast, Carl pointed out another interesting lesson he learned in the NBA: Not doing things just to fit in.
“Fitting in was easy,” he said. “Doing everything that everybody else does was easy. If I stood out in some type of way, I’m going to have different results. I’m going to have stand-out results.”
That’s called the “Law of Contrast” and it produces that exact effect of changing the outcomes that everyone else is experiencing. Carl is smart, he recognized that differences make a difference, and doing whatever it takes is what is required to make real, meaningful differences.
Every off-season for the last 11 years, he has run a camp for kids in Milwaukee where he tells youth his story of hard work and persistence. “I always tell the kids to apply themselves and always be persistent,” he said. “If you dream, apply yourself and be persistent. With hard work, man, the sky’s the limit.”
When Carl says the sky’s the limit he means it. He is smart to recognize that it’s important to dream big, because if we don’t – we may be selling ourselves short. “You have to dream bigger than your mind could ever imagine,” he said. “I wanted a nice house. I wanted a nice car. I said, and I got all of that. So, what do I do, do I stop now? Maybe I didn’t dream big enough.” That’s a big statement coming from a kid who grew up to be the first in his family to graduate college and go on to be not only a top NBA basketball start, but a good businessman, father and someone who gives back to the community.
I’m convinced that in whatever he takes on as a basketball player or in his post-hoops career, Carl Landry is not going to stop getting better at whatever he does, and in the process of doing so, make the world a better place.
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