Changing the Guard
Anne and I came home from our round the world trip in 1979 with $300 in traveller’s cheques and a $270 Visa bill, net worth thirty bucks (but it was all in cash).
I secured a line of credit for $3,000 and I started my own business, a public accounting office. The first thing I did was hire a bookkeeper because I had to be out and about getting business. After two weeks, Lindy, my bookkeeper appeared at my office door with a file in her hand, it was red and letter sized. I looked at her and she said, “It’s payday, I’ve done payroll.” She gave me the folder and I opened it. There was only one cheque.
It wasn’t mine.
That’s when I understood the true meaning of being self-employed.
My cheques would not be automatic; they would depend on me, my energy, intelligence, intuition and abilities but, if I did it well, those cheques could be unlimited.
Most established business owners today, have a similar story, they started a business doing something they knew and liked with a goal to build something, achieve independence.
They were typically short of capital, scrambling for trade, excited by the prospect of building a business, optimistic about life and enjoying getting up in the morning (most mornings).
Today, those who have been successful haven’t changed their persona. They still love the feeling of building something, the daily thrill of being in the middle, in control, taking risks and winning. The difference now is that the energy levels are not what they used to be, the company is established taking the edge off the excitement, it’s almost like it could run itself. The spouse is often suggesting that here is more to life and it should be enjoyed while they still have their health.
Businesses go through cycles, those that stay alive through the first cycle (survival), grow to a level referred to as sustainable, from sustainable the graph either curves up and the business becomes a family legacy or it curves down, it atrophies until it’s gone.
Much of the path a business takes, curve up or curve down, is determined by the reaction of the founding entrepreneur to the changes in the business and themselves.
For the business graph to curve up, towards legacy status, new energy must be employed, people with the energy that the founder had when he or she started the business. And then those people need to feel that they are building something. They are the new first generation.
When you take a family wealth view, the original entrepreneur is building a family wealth platform of which building the business is a part. Succession planning is an important part of building the family wealth. Success comes from recognizing the value of the human capital in the family. The plan must balance the experience of the senior generation with the energy and essential authority of the next generation to build, if that next generation is to retain the entrepreneurial spirit and keep the business graph pointed up.