With All Due Respect, Sir: You Need a Younger, Hungrier Heir
Let me come right out with it: I have feminine tastes when it comes to movies and television. Sure, I love watching The Godfather, Homeland, and any Tarantino film. But I enjoy just as much a rerun of Sex and the City and I'm looking forward to the next season of Girls. Which brings me to this week's premiere of Downton Abbey on PBS. This is a great show: excellent acting, smart writing, incredible sets, and beautiful costumes. I love it. I admit it. I'm comfortable with that.
But not as comfortable as Lord Grantham. And neither should be any business owner--fan of the show, or not.
Robert Crawley, the 7th Earl of Grantham, otherwise known as Lord Grantham, is the family patriarch. He married an American, Cora, some years ago and merged their fortunes together. The plan was to live their lives happily ever after, marrying off their three daughters to other members of the aristocracy and taking care of the estate, along with its staff of servants, until the time came to pass it on to the next generation. Of course, the plan doesn't work out that way.
Matthew, Lord Grantham's chosen heir, falls in love with and marries his Lordship's daughter, ensuring a smooth transition of the estate to the next generation. All the women, including my wife, love the guy and his dreamy blue eyes. Please! How can a balding middle aged man like me even compare? But I hate Matthew and his dreamy blue eyes. He won't help Lord Grantham out financially. And, more annoyingly, he does nothing to help Lord Grantham navigate through change.
Like business, everything about Downton Abbey is about change. Changes in society after World War I. Changes in manners and the way people behave. Changes in wealth. Not to mention the 87 clothing changes that everyone on the show makes before those endless family dinners. The story is about how Lord Grantham deals with these changes around him, while still trying to hold it all together. And, at least by the end of the season's premiere, he's about to lose his entire financial fortune, along with his beloved Downton Abbey, as a result of a bad investment. Poor guy. And Matthew's no help either of course.
OK, so you're not Lord Grantham. And neither am I. But many business owners probably have more than a few things in common with him. Many of us have been running our businesses for a while. And we have assets to protect. I'm determined not to make the same mistakes that Lord Grantham made and imagine you are too.
Lord Grantham became fat and happy. He considered himself just a "caretaker" of Downton Abbey. He let other people run his financial affairs. He paid little attention to the operations of his house, let alone the antics of his daughters. (That incident with the Turk? Don't even go there!) Like most of us, he's not a bad man. But he became too complacent, too trusting. Worst of all, he chose a lousy heir. And now he's in danger of paying a huge price: losing it all.
As a business owner you cannot become fat and happy. Ever.
I know you want to. So do I. Maybe you've built your business to a certain level of success. And it's taken a long time. You're looking at a comfortable level of cash in the bank. Or you bought a building when prices were low. You see the fruits of all of your hard work over the years: a good customer base, a bunch of loyal employees, a respectable reputation in the area. But don't buy into this myth. Because it's fleeting. Sure, you've probably got more than the typical two weeks security that an employee at a company has. But let's face it: like every other small business owner I know you're no further than 90 days away from ruin if you let things go. If it can happen to Lord Grantham, it can surely happen to me--or you.
So how can you avoid becoming complacent? Stay lean. And bring in younger blood. Like my friends Alan and John did when they hired Terry.
"Alan" and "John" run a 70 person wholesale distributorship with the right attitude. They're not British aristocracy but they do live the life of upper-middle-class Americans in their early 50's: they drive SUVS, live in nice homes, and cruise on Royal Caribbean. They certainly don't spend beyond their means.
Whatever cash they've managed to accumulate has been distributed from the business to investment accounts, making business cash on hand always a little "tight." This keeps them lean and hungry. Sure they have some debt, like a mortgage on the company's building and some equipment. But for the most part they avoid doing anything too speculative. This is a good thing and a not-so-good thing. Being prudent when it comes to investments is important but being too afraid to take a few healthy risks when the environment calls for one can also be the downfall of the fat and happy business owner.
What's saved them? Youth. They were lucky enough to find Terry about 10 years ago. Very lucky. And they were smart enough to recognize his abilities even when he worked in the warehouse. They elevated him. They taught him. They paid him well. They promised him equity. And now Terry is their general manager. Terry is 20 years younger than both owners. He has small children and all the problems that both partners had 20 years before. And Terry brings to their business what Matthew has failed to bring to Lord Grantham: a hungry, new, younger outlook. Terry has every intention of growing the business and will do whatever he can to make it a success. This is exactly what every fat and happy business owner needs: youth. This is what Lord Grantham needs.
If you're experiencing some level of success then the hardest thing you'll have to deal with is becoming fat and happy like Lord Grantham. It will be difficult to keep coming to work every day with that same hunger that you had when you were younger and building your business. It will be more difficult to take risks with your hard-earned assets. You may find yourself becoming less creative, less motivated, and less inclined to make the hard decisions every business owner needs to make to keep his or company profitable and growing. Don't let this happen. Don't become fat and happy. Don't become like Lord Grantham. Look for youth. But avoid the boring, unhelpful Matthews of the world. Instead, bring in younger, smarter people with the intention of grooming them to be managers. Supervise them closely. Offer them equity. Hopefully you'll get lucky too and find the right heir. It will keep your business successful. It will keep you young. It will make you smarter.
As for me. Hey, I'm feeling smarter already because I watch PBS!
GENE MARKS | Columnist | Owner, Marks Group
Gene Marks is a columnist, author, and small-business owner. He oversees the Marks Group, a 10-person technology consultancy to small and medium-size businesses. A certified public accountant, Marks has also worked in the entrepreneurial services arm of KPMG. He writes for The New York Times, Forbes, and The Huffington Post.