Don't Let Your Breaking Point Upend Your Goals
I started my business seven years ago and have grown it to $3 million in sales. Our work is never-ending. We work every weekend and every holiday. Whenever it looks like we're going to hit a lull in the action, the phone rings for a last-minute job, and off we go. I've reached the point where I realize I can't handle any more myself. For the company to grow, I need to bring in a professional manager. These guys are expensive--$90,000 to $120,000 a year--and they don't produce revenue. I am having a difficult time figuring out what to expect when I spend that kind of money on a non-revenue-producing employee. I'm also having trouble getting my brain around the fact that this new hire would be the highest-paid person in the company. --Name withheld
Sooner or later, every growing business reaches a point at which the owner can no longer handle both sales and operations and has to decide which responsibilities to hand over to someone else. The mistake many people make is to base the decision on whatever problems they're having at that particular moment. Instead, they need to start by figuring out where they themselves want to wind up.
The writer of this query--I'll call him Josh--is having a hard time precisely because he is reacting to the stresses of the business rather than thinking about his personal goals. When I asked him what they were, Josh, who is 43, said he'd like to sell the company and start something new, preferably before his 50th birthday. "I'm not in a big hurry," he said. "I just want to get to the point where I feel it was worth all the effort."
"How do you measure that?" I asked.
"By money, I guess," he said. How much? "It depends on how long it takes, but I'd probably feel that $3 million or $4 million in cash would justify it."
That was a reasonable goal, given his business's growth rate and profit margins. More to the point, the information made it immediately clear what he has to do. To sell the business and walk away, he will need a team in place that can run it without him. Otherwise, any buyer--assuming he could find one--would probably insist that he stick around. So his focus has to be on building the team, and he should hire the new person with that in mind. Whomever he hires might or might not turn out to be the right person. If not, Josh will have to keep looking. But he can stop fretting about the cost. The right person will enable him to walk away in five years with $3 million to $4 million--which should more than justify his or her salary.
NORM BRODSKY | Columnist
Street Smarts columnist and senior contributing editor Norm Brodsky is a veteran entrepreneur who has founded and expanded six businesses.