* * *
Did I mention I'm thinking about buying a minor-league baseball team?
People leave jobs all the time, but it doesn't occur to a lot of entrepreneurs that there's a time for them to move on. Understandably, too, because their companies are so closely intertwined with their identity. However, for the sake of the business -- and for your own sanity -- it's often better to hire a CEO (or perhaps even to sell out) than to stick around too long. Different people reach this point at different times in the life of the business -- and in their own lives. Some find they can't -- or don't want to -- develop the new skills needed to manage the business as it gets bigger or as the market changes. They become lethargic and depressed. Others get bored and sometimes go off in crazy new directions. Either way, you need to be able to identify the symptoms and decide what to do about them before you start poisoning the company.
Tom Carns, whose $5-million company, PDQ Printing (featured in "Quick Study," April 1992, [Article link]), in Las Vegas, has been reorganizing under Chapter 11.
"I was the president of my national trade association. In December 1991 my picture was on the cover of the industry magazine. People from around the United States would pay $3,500 to spend a few days with me in the print shop. I was doing one-day seminars -- I'd leave Las Vegas at 7 a.m. on a Thursday morning to do my seminar, and I wouldn't be back in the office until Monday morning, when I'd often have consulting clients waiting for me. I was so blooming busy that I lost control -- one of my managers embezzled several thousand dollars.
"The business just wasn't that exciting anymore. So I looked for something that was.
"After we filed for bankruptcy, I spent a lot of time really beating up on myself. I went through a period when I was really down. Was I just a flash in the pan? Was I stupid? Did I have what it took to bring the business back?
"Last January I went up to a ski resort in Utah. I didn't leave my room for five days. I completely dissected the business. Then I put together an overall plan. One of the things I've come to recognize is the limits of delegation: You can delegate tasks, and you can delegate responsibilities. But the one thing you can't delegate is leadership. If I hadn't divorced myself so much from the business, the trouble wouldn't have happened."
Leif Blodee, cofounder of Keener-Blodee, a Holland, Mich., furniture manufacturer (featured in "Hot Seats," June 1988), which went out of business in 1991.
"Before my partner and I started the company, I had a small design firm, where I was designing furniture for other manufacturers. I showed one of them a line of chairs and was told it couldn't be done the way I'd suggested. I said, 'Oh yes, it can.' So I went into business with a guy I'd known for a long time, though we had not been in business together. We raised about $600,000 from investors and banks and began to increase the size of the old facility from 5,000 square feet to 12,500 square feet.
"My partner had a large-company mentality -- he had run a division for a large company. He spent a lot of time applying for licenses to do business in states where we never sold a piece of furniture. We hired reps all over. We had 12 people in a brand-new plant, all busy making samples for the reps. What we needed were orders.
"We expected to reach several million dollars in sales a year, but we never sold more than $200,000 in a year. When it became clear that the bank wouldn't let us keep going, we quit. But I don't quit very easily. The bank sold a lot of the equipment for pennies on the dollar; in fact, I ended up buying some of it. We should never have expanded until we had orders in our pocket. We expanded too fast. It was too easy to get the money."
Ann Machado, founder and CEO of Creative Staffing, a $12-million Miami-based temporary-employment business that was on last year's Inc. 500 list; she shut down a similar business in October 1991 after it persistently lost money.
"We began making money in our original business in the second month of operations, in 1985. People would come to me and say, 'You should franchise this.' I didn't want to do that, but finally, at the end of 1989, I thought it was time to put our system to the test. The way we did it was to start a new company, up in Orlando.
"I had the right person to run it, someone who'd worked with me for years. We'd done extensive market research. Then, just before we were set to open, an industry friend said, 'Don't open.' The market had been flooded -- there were something like 117 temporary agencies in a town that could support maybe half that many. But by then I was too committed. I said, 'I don't participate in recessions.'
"I'd been in Miami 22 years. Orlando was a different market. Sometimes it took us six months to get an appointment, and it would usually lead nowhere. People in Orlando thought nothing of canceling an appointment on the spot.
"We never reached break-even. I'd write a check for $10,000 every month. I changed managers after aa year -- I changed practicall everything. Finally, after losing $150,000, I pulled the plug. But really, I had no business starting it in the first place."
