The Story of a Business
This story, told from the perspective of a wife of a business owner, while fictionalized, is based on numerous business stories I have experienced.
"There was no doubt about it, Frank was gifted at sales – not in the mold of a pushy or high-pressure salesman – he was a conversationalist. He liked people and would listen to them. He would pick up on what they wanted and find a way to present that to them. As it often is with talented people, he had no idea how to transfer or teach that talent. Frank had partners, who helped him with the administration of the business, but the business was all about Frank. There was no question, Frank got tremendous satisfaction from that.
"When our son, Cody, was struggling, Frank made a place for him in the business. Cody had potential and wanted to succeed, but he was overwhelmed by Frank’s performance. Frank was a believer in tough love. The result was somewhat of a standoff. Cody excelled at the technological aspects of the business, which Frank tolerated as a fad. Cody embraced the Internet and introduced many new ways for the business to operate, but ultimately it was Frank who got the big sales and made things work.
"When Frank had his stroke, Cody tried to step up to sell the way Frank would. Unfortunately, Frank’s customers were not Cody’s customers, and he failed to keep them with the business. The biggest competitor of the business hired away one of the partners and there was the difficulty of how to deal with that ownership interest. The constant pressure on Cody was a factor in his divorce, which even more complicated his life.
"When Cody told me he had to sell the business at liquidation value to the biggest competitor (“while it was still worth something”), I was devastated, especially when Cody told me what the business was worth. I could only think of the hard work and pride that Frank put into the business and how that had now been so diminished. And my heart was broken for Cody, who had so much potential and was willing to give so much only to have it all fall in on him.”
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What did Frank do, or fail to do, to cause such a tragic end to the business he built? The answer lies in Frank’s perspective of the business.
First and foremost, Frank did not see the business as a system – a group of procedures that produced cash flow. Frank saw that his talent and ability could cause the cash flow, but did not perceive that after procedures were in place to produce the cash flow, others could perform in various ways (some new and very effective) to increase and sustain business cash flow. Frank did not understand that the ultimate and highest value of a business will be reached only when it is a sustainable system not dependent on any one individual.
Second, while Frank did bring in other owners, he did not negotiate agreements with those other owners regarding the value of the business. He also had nothing in place, such as a non-competition agreement, to prevent the withdrawal of an owner to compete with the business.
Third, when Frank discovered he could not train others to produce, he failed to find training resources to develop the capabilities of others to sustain the procedures of the business. Frank focused on his performance and got satisfaction from that, failing to realize that his performance could not sustain the business. Of course, his most tragic failure in this regard was his failure to include his son as a principal partner and allow him to make a major contribution to the business.
Frank did not see that his best legacy to his family would be wealth and financial security derived from the sale of the business as a sustainable and thriving entity. Had Frank had the proper perspective, an owner’s perspective – a value perspective, things could have been different.
For more on owner disability, go to https://btcllc.net/frequently-asked-questions/100-what-happens-to-my-business-if-i-become-disabled .