Among the Baby Boomer business owners who are beginning to plan their retirement, there are millions who founded the companies they plan to sell. Many of these were technicians when they started. They began as employees, and then used their skills to start a small business.
When you are bootstrapping a new business, there really isn’t much opportunity to make big mistakes. You can’t afford it. The “luxury” of no resources can be described in two ways. You don’t dare take the risk of betting everything on one course of action (because a wrong decision kills the business) and you simply lack the wherewithal to try anything, no matter how enticing, in a really big way.
For most startups, that means the owner undergoes a process of trial and error through low-risk experiments. Advertising is limited. Hiring is cautious. The first option for any new skill required by the company is usually the owner. He or she learns how to do everything in the business, because it’s too expensive to pay someone else to do it.
Of course, most small businesses fail in their first few years. The business school explanation is that they are “undercapitalized.” The practical translation is “They have no money.” They lack the resources to hire highly skilled employees, or for aggressive marketing. For many that shut down, “undercapitalization” means simply that the business failed to generate enough money to provide the founder with a living wage.
Owners with sufficient creativity, tenacity and vision make it and grow an enterprise. Their experience in low-cost, trial and error experimentation becomes part of their skill set. “Good decisions come from experience; experience comes from bad decisions.”
Thus, many technicians grow gradually into the role of business owner. A few bad hires at low wages prepare them for better decisions when taking on more skilled, higher wage employees. They can oversee all aspects of the operation, because personal experience with sales, marketing, and accounting gives them a broader knowledge base than just the operational skills they started with.
For any subsequent owner, this “Trial by (small) fire” approach to learning the business isn’t feasible. A successful business has too many moving parts to permit a gradual, start-from-scratch approach to building an ownership skill set.
Whether a retirement strategy involves transition to employees, family, or a third party, the first step is documenting the owner’s knowledge base. Expecting new ownership to simply “know” what to do isn’t reasonable.
My 48 page eBook, Beating the Boomer Bust, How Baby Boomers Changed the Face of Small Business in America, and Why it isn’t Over Yet, is available as a free download here. The password is “Woodstock.”