When John and Gloria McManus, cofounders of Magellan's, decided they needed time off, they found themselves trapped by the company's daily demands. Here's how they formed their escape plan.
Even if you really love your company, the day may come when it feels like a trap. But there is a way out--as John and Gloria McManus learned
By the end of 1996, John McManus, cofounder with his wife, Gloria, of Magellan's, a seven-year-old travel-gear catalog company, had reached the point where he could take no more. Magellan's was successful, mind you, was even then on its way to a third appearance on the Inc. 500--but McManus felt bled dry. Something had to give. And he figured he had only three choices: stop growing the company, hire a professional manager to take over, or sell.
All he knew for sure was that things couldn't go on the way they always had at Magellan's. It just wasn't worth it any longer, despite the fact that Magellan's was profitable and enjoyed a loyal following of customers who returned again and again for the company's electrical converters, passport wallets, water purifiers, and travel pillows.
"When employees call in sick, you're where the buck stops," says McManus. "You're where the buck stops with everything. It's this gradual, slow dawning that things are not as fun as they were. And that the investment in having your own company is not paying off as you thought it would. Yet you feel the huge pressure of keeping this 'child' growing, because you feel you don't have any other option."
But now he would look at his three options whether he believed they were smart or not. After all, he and Gloria were physically stretched to the limit: Gloria, age 53, was running the catalog call center, the distribution operation, and the company's one retail outlet; John, age 55, was in charge of sourcing products, merchandising, and virtually everything else. "It seemed like more than any person could possibly handle," says Gloria. So McManus, the CEO, considered option number one, grounding sales--only to recognize that Magellan's wouldn't survive if he did. The travel-goods industry was moving forward, and he wanted to be on that train, not be run over by it.
"I've got all these opportunities," McManus remembers telling his good friend Bob Manning, a fellow entrepreneur and an experienced CEO of other people's companies, "but I can't take advantage of them. I spend all my time hiring people." It was Manning who'd helped McManus devise the original plan for Magellan's, and McManus returned to him often for guidance. "Bob," said McManus in the midst of a New York City restaurant conversation that he calls My Dinner with AndrÉ, "what am I going to do?"
Manning felt sorry for his friends. "The company was running fine, but the amount of energy required was too much for John and Gloria. Working 20 hours a day, seven days a week is no life. It was killing them to do it."
Well, there was option number two: going the professional-manager route. To the McManuses, it sure sounded wonderful. Hire someone to take over the day-to-day headaches? Yes. The worse the McManuses felt, the better the alternative looked. The choices had been narrowed to hiring someone or selling out--"and I thought that if we could only get help," says Gloria, "John would stop thinking about selling." The couple finally hired an executive in spring 1997. The honeymoon lasted a few days. Then they regretted their decision. Now almost halfway into 1997, and down to the final option, John McManus contemplated door number three: Take the money and run.
"We were ready to jump ship," McManus admits. Selling out seemed like the only way the couple could get their life back. But several advisers--McManus's lawyer and Manning included--warned him against it. They told him how arduous negotiations would be. Worse, they said he wouldn't get a good price for a business still so heavily dependent on its owners.
And that's when McManus lost it. "Fine," he thought. "If I can't sell this company for what I want," he told Manning, "then I'll take what I can get."
It was his last, desperate recourse, and the darkest moment he'd known in his eight years building Magellan's. Nothing had come close to feeling so painful. Not the time McManus fell ill with pneumonia in 1990 and Gloria brought him orders to inspect "while I lay on my deathbed." Not even the Friday before Easter in 1995, dubbed the "Good Friday Meltdown," when the network crashed and hundreds of orders had to be reconstructed by hand. Nothing was as bad as this defeated bailout.
But then it got worse. McManus realized that not even "taking what I can get" would rescue him and his wife. The way Magellan's was managed, any sale--even at a distressed price--would in all likelihood depend on his and Gloria's continued heavy involvement. So even the option of selling out wouldn't solve anything.
And if selling out wasn't a real choice after all, then what was? It was as if John and Gloria McManus had hit the wall and finally--desperately--run to what they'd always believed was the emergency exit, the sellout, the escape route they could count on, only to find that the exit was locked.
It's There. You Will Hit It.
Founders don't imagine the wall before they hit it. The term is so vague that it's almost incomprehensible. Mention it to veteran entrepreneurs, however, and they know immediately what you mean--the way parents understand things their friends without kids can't. The wall may be that moment when your old tactics suddenly stop working, or when you can't lug your company to that "next level" it needs to reach, or when the problems and frustrations and burdens of leadership suddenly feel too heavy to carry for even one more day. Sometimes the wall is that moment when you simply run out of gas.
That John and Gloria McManus hit the wall shows, for one thing, how hard it is to avoid. By the time they launched Magellan's, in 1989, they were already unusually experienced, thoughtful, deliberate businesspeople. They'd forged their strategy after years in the travel business (they had met and gotten married while at Pan Am), and they had seasoned advisers like Manning to turn to. By the time the couple hit the wall full force--both physically and professionally--their company had already turned an important corner. Magellan's was consistently cash positive by 1993 and profitable every year but one thereafter.
