Will Work for Paycheck
Can an entrepreneur find happiness working for someone else? Plus, answers to questions about discontinuing a product, valuing a company, and more.
Inc Query
The challenge of working for someone else, and other curious quandaries
We have a lot of great queries this month, including questions about becoming an employee, discontinuing a product, finding valuation formulas, deciding when to sell the company, and competing with a former employer who wants to put you out of business.
The Entrepreneur Trap
I'm a 49-year-old career changer. I started my company, a trucking business, in 1975. By the mid 1990s we'd grown to 28 employees and branched out into warehousing. Around that time I had one of those midlife "Is that all there is?" crises and decided to sell, getting an all-cash buyout in 1997. (To my surprise, the company is still in business. Maybe I wasn't God's gift to trucking after all, as I once thought.)
After the sale I took nine months off, built a house, and began looking for a new career. Eventually, I landed a sales job in a computer business, where I had struggles with the owner. The company was good in technical skills but abysmal in administration and employee motivation, and I couldn't help pointing that out. Having never been an employee before, I didn't grasp the depth of the emperor's-new-clothes mentality.
I also lacked experience in internal politics. I was constantly catching flak for suggesting how other departments might improve. That didn't make sense to me. In my company, if something was broke, I cared only about getting it fixed. Anyway, I was fired after two years for failing to toe the line, which was a blow to my ego because I'd really been trying to make it work.
Now I'm halfway through a computer-engineering course, and I'm planning to start looking for another job. I just wonder if I'm too headstrong to work for other people. I don't want to go back to the entrepreneurial life. I don't like constantly having to gamble everything I've worked so hard to earn. But is there an alternative? Do I have to start another company because I'll never find happiness as an employee? Is there hope, or do they shoot old horses? --Bruce
We don't hear from many people like you, Bruce. Sometimes entrepreneurs will become employees because of management contracts they've signed in connection with the sale of a business, but we know of only a handful who have a real desire to make the switch from entrepreneur to employee.
Do I have to start another company because I'll never find happiness as an employee? Is there hope, or do they shoot old horses?
But there is hope for you. "A lot of us are too headstrong to be long-term employees," says veteran entrepreneur and Inc columnist Norm Brodsky, who once, in the distant past, was an employee himself. "I know I couldn't work for someone else anymore, but that doesn't mean I couldn't work with someone else. I'd advise Bruce to think about becoming an independent contractor -- doing outside sales, for example.
"Of course, it may be that what he really wants is to get involved in the management of a business. In that case, I'd suggest he find a small company that wants and needs the help of an experienced entrepreneur and do an unconventional deal of the kind I've written about in the past. (See ' Hiring the Best,' February 1999.) If that doesn't work, start a business."
Saying You're Sorry
I'm hoping you have some (brilliant) suggestions for notifying customers that a product has been discontinued. I've read all sorts of advice about introducing new products but can't find anything about gracefully withdrawing old ones. Does anybody have a method that doesn't alienate the customer and cost you sales? --Lori
Yes, Lori, Chuck Sussman does. In the course of building Pretty Neat Industries, a maker of cosmetics organizers, into a $12-million Inc 500 company, Chuck and his wife, Greta, had to discontinue quite a few products. "It's real simple," Chuck says. "When you get an order for the item, you send back a little note, saying, 'Boy, are we alone! I loved that item, and I can see you did, too, but not enough people went for it, so we've had to drop it from the line. Instead I'm sending you a copy of our latest catalog. If you'll include this note with your order, you can get a 10% discount on anything else you order from us. That's my way of saying, We're really sorry."
What It's Worth
In "Business for Sale," you often refer to formulas used to figure out what companies in various industries should sell for. It may be a multiple of earnings or a percentage of sales or whatever. Where can I find a comprehensive list of those rules of thumb? --Ozzie
We know of no such list, Ozzie, but there is an alternative. "First you need to understand that all those rules of thumb boil down to the same thing -- namely, the present value of future cash flows," says Sam Kaplan, president of Central Chase Associates LLC, in New York City, who buys and sells companies on his own and with partners. "That said, I still want to know the rule of thumb for any industry in which I'm thinking about buying a company. Why? Because it's important to know the terms that people are thinking in and the language that they use.
