The Brass Ring

Posted on March 25, 2012 by John F. Dini

A long, long time ago (I’ve actually ridden only one such in my lifetime) Carousels had a spring-loaded sleeve of brass rings protruding near the innermost (and least popular) track of horses. A bigger kid could lean out and yank a ring from the sleeve with considerable effort, and be rewarded with a free ride.

Today, of course, we can’t even read the description of such an ill-conceived device without cringing at the thoughts of fallen children, their bodies horrifically mangled in the giant gears of the turntable, and the litigation and public outrage that would follow. Times change.

“Reaching for the brass ring” has become a metaphor for chasing success. As I discussed in last week’s column, the massive number of Baby Boomers would have affected the economy regardless of their other tendencies, but their commonality and competitiveness raised that impact by an order of magnitude.

If you are a Boomer business owner, I defy you to say that you’ve never complained about the work ethic of the younger generation. From the mid 70’s to the mid 90’s (prime time for Boomers in the workforce) American white-collar workers saw the rise of an average work week from just over 40 hours to almost 54. This while our European contemporaries were  campaigning for (and winning) 35 hour weeks and ten weeks of vacation. What made American Boomers so competitive?

Our numbers. There were simply too many of us to accommodate at every stage of our lives. Just as the impact of ageing Boomers leaving the workforce will come as a surprise to most, so the flood of people into schools, homes and jobs took the majority of businesses (and governments) by surprise.

I attended public schools in the 1950’s where 45 or 50 children were the norm in a classroom. It had nothing to do with unenlightened teaching methods or weaker unions. There simply weren’t enough classrooms. Between 1945 and 1957 the annual number of new births in the country increased by 53%, from 2.8 million to 4.3 million. They couldn’t build schools fast enough.

When I started college in the late 1960’s, they were pulling trailers into muddy fields and calling them community colleges. There weren’t enough universities for all those who wanted to attend. And when I graduated and applied for a position in corporate America, their hiring offices were like the Department of Motor Vehicles, with group testing and rows of interviewing offices.

It was a time of plenty in America, but there wasn’t enough of what the Boomers were seeking. The “Spock Babies,” as we were called, had been raised to believe that every one of us could, and should, succeed. We all expected the corner executive office, but there weren’t enough places for everyone.

(An aside: I’ve always been curious about Gene Roddenberry’s selection of a name for the First Officer of the Starship Enterprise. Was there some subliminal appeal that helped make Star Trek one of the most popular Boomer shows in history?)

From 1966, when the first Boomers turned 21, through 1975, the rate of college graduations in the United States tripled on an annual basis, from just over 600,000 to nearly 1,700,000 a year. (See the timeline at The Boomer Bust)

Baby Boomers competed for the better places in schools and for admission into the better universities; and then competed fiercely for jobs when they graduated. Once employed, they were part of a glut of other qualified Boomers; roughly the same age, and with similar qualifications. The brass ring went to the ones that worked hardest, longest and smartest. An entire generation accepted competition as a way of life. It was a numerical inevitability.

But many Boomers were squeezed out by the numbers, or were disinclined to engage in a battle for promotions and raises. They still wanted the gratification that Dr. Spock said they should have. They still expected the brass ring.

They went into business for themselves.

From 1975, when the first Boomers turned 30, until 1986, the formation of new businesses in America jumped from 300,000 to 700,000 annually. By 1990, when the oldest Boomers turned 45, the number of new business formations had fallen back to 600,000. It has remained there since. As our population has grown from 190 million to 310 million, the number of business start-ups has been flat.

The massive number of small businesses in the United States, the source of 67% of all new job creation since 1995, is clearly the product of millions of Boomers who sought success outside traditional wage-paying jobs. For the first time since the industrial revolution, (when production consolidated into large enterprises) America became a nation of shopkeepers again.

These are the businesses that are beginning to be sold. Whether there are enough buyers is another question.

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Posted in Entrepreneurship, Exit Planning, Exit Strategies, Life After, Thoughts and Opinions | Tagged , , , , | 3 Comments

3 Responses to The Brass Ring

  1. Phyllis Pickard says:
    March 26, 2012 at 11:49 am

    Thank you for your articles. I really like Awake at 2 o’clock in the Morning. That is when I started reading your articles. My husband and I were born about 10 and 8 years respectively before the Boomers. Because we were young children when this started, we didn’t really know what was happening. I would sure like to play catch up now and prepare for the scoietal changes that are coming.

    Reply
  2. Todd Marquardt Esq. says:
    March 26, 2012 at 10:27 pm

    Very well researched article. Thank you Babby Boomers!

    Reply
  3. Brad Elmhorst says:
    March 29, 2012 at 8:33 am

    You final sentence is spot on. Government regulation is moving small business owners back toward the corporate environment to secure health benefits and retirement plan opportunities that they can not afford as business owners. Corporations benefit from seasoned experienced small business employees closing the door to many college graduates.

    Reply

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The Pig in the Python

Posted on March 18, 2012 by John F. Dini

The title of this section refers to a well-known biological phenomenon. The python family of snakes have hinged jaws that allow them to swallow animals much larger than their heads. These animals are gradually consumed as they pass through the snake’s digestive system. If the prey is very large, you can plainly see the shape of the animal as it moves through the snake.

It is just as easy to identify the progress of the Baby Boom generation through the American population. Whatever stage of life the Boomers were experiencing, the country was experiencing. And we all experienced it together. (see my timeline at The Boomer Bust) Although the pure size of the Boomer generation underlies a lot of its impact, there were two other factors, commonality and competitiveness, that greatly enhanced it.

I grew up in the industrial Middle-Atlantic Northeast. “Ethnicity” in my world meant Polish, Italian, German or Irish. Of course we had discrimination, bigotry and ghettos. I cringe at some of the racist nursery rhymes I was taught by my friends. (Thankfully, if I recited them at home my parents quickly explained why those words were bad.) But we didn’t have Jim Crow laws, or poll tests, and although my schools were largely white, it was as a reflection of the neighborhood, not of the law.

I had no idea what rhubarb or okra were until I was an adult. I had never heard of ice fishing. Iced tea came in one flavor; if you wanted it sweet you put sugar in it. When I was 20 or so, I remember reading a debate in a restaurant industry magazine about whether America was ready to accept a regional ethnic food as mainstream…pizza! I had a pizza parlor on virtually every corner. It shocked me to realize that everyone else didn’t.

Like most early Boomers, I grew up in a culture that was defined by regional and ethnic dominance. Children had for generations grown up with roughly the same attitudes, the same ideas, and the same habits as their parents. They just hadn’t experienced much else.

Then came television. The first stations broadcast in the late 1930’s, and television was a huge hit at the 1939 World’s Fair in New York, but WWII had put a stop to production of TV sets. Returning GIs were ready to spend on consumer goods, and factories built for wartime electronics production were more than ready to deliver. In 1948 the first networks began broadcasting syndicated content, and in 1951 color televisions first became available. The oldest Boomers were 6 years old.

Unlike almost every other country, the United States developed television as a private enterprise. As in radio, content was paid for by commercial advertising. In fact, many of the consumer brands that made radio so successful were the first to move headlong into the new medium.

Thus people watching television became “consumers.” The success of a show was determined by the number of products it sold. How long do you think it took for these advertisers to figure out that two out of every five people in the country could be targeted as a distinct audience? For the first time, a generation was identified as a market, and sold to by age, not by the regional or ethnic orientation of their parents.

The WWII generation had already proven their willingness to spend on their kids. Scarred by the Great Depression, they focused on working to give their kids got the things they had lacked. They started by making Benjamin Spock’s 1946 book, The Common Sense Book of Baby and Child Care a huge hit, buying 500,000 copies in its first six months.  Children’s toys, books and shows quickly became an entire segment of the marketing industry.

For the first time, children were growing up encouraged to perceive themselves as children. They weren’t little adults in training. They weren’t just future farmers, or future factory workers. They were taught by parents and advertisers to think of themselves as children first, and as the life successors of their parents second.

And, for better or worse, 78,000,000 of them were all being raised pretty much the same way, at the same time.

Commonality made the Boomers a cohesive force in the American culture and economy like no generation before them. But sometimes that commonality took on the aspects of a school of fish, where thousands of individuals all turn in the same direction at the same time. This happened again and again and, as you will see, not least in the transformation of small business in America.

When it was combined with Boomer competitiveness, it changed everything. Next week, how the American Baby Boomers became the hardest workers in modern history.

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The Approaching Tidal Wave

Posted on March 11, 2012 by John F. Dini

A year ago this month, I began speaking to business owner groups about “Beating the Boomer Bust.” Since then I’ve delivered the presentation over 20 times, both locally and to national groups, and the requests for it are increasing.

It’s the product of a year of research, and of fifteen years helping business owners prepare to leave their companies. I’m convinced, actually I am certain, that small business owners in America are ignoring a tidal wave of change that, just like a real tidal wave, will leave a few small businesses untouched while wiping many others from the face of the planet.

Am I being dramatic? Absolutely. Am I being overly dramatic? Not in the slightest. Peter Drucker once said “I don’t predict the future. I look at what has happened already and point out the inevitable result.”

Two years ago I set out to learn whether the birth rate curve of the Baby Boomers was duplicated in other areas of American society and the American economy. Not only did that prove to be the case, but the correlation is shockingly perfect. When the Baby Boomers reach  an age where specific life activities would normally be expected, the incidence of those activities escalates overnight (with one notable exception that I’ll discuss in future weeks), in volumes not seen before or since, and exactly corresponding to the birth rate increase that started in 1945.

Describing it as a tidal wave isn’t at all metaphorical. Like a tsunami, it is well documented. The causes are known. It is traveling at a defined rate of speed. Its arrival is both inevitable and on a schedule. It will get higher and more dramatic as it approaches the coastline (Boomer retirement ages), and those who ignore the warning signs will be very, very sorry.

The impact will be universal, but I am going to focus on the implications for small business owners. Those who are exiting now will still have some options between selling to a late-stage Boomer and selling to Generation X, and should know what the differences are. Those Boomer owners who are planning to move on (perhaps not retire – another topic we’ll address) in the next 10 to 15 years need to understand the changed market that they will be selling in. Late-stage Boomers should be building a very different business than the ones they started or purchased. Post Boomer entrepreneurs need to assess the many opportunities that these changes will create.

Let’s start with defining the Baby Boom. Most of us know what it is, but it’s more than just a mere demographic description. Since this entire series will be about the inevitability of numbers, we should put the boomers in an economic context. Their numbers helped determine the personality traits of a generation, and of the generations that followed.

An important fact to understand in our discussion is that the Baby Boom is an American phenomenon. We were late to join World War II, and suffered far fewer causalities as a percentage of our young male population. In addition, the US was never a battlefield in the war, so our returning armies were discharged into a healthy infrastructure, with an industrial base fully geared up for maximum production.

In 1945, as the GIs began returning from WWII, the US population was 140 million, and the birthrate was about 2.8 million. That number of births had been roughly consistent, between 2.5 and 2.9 million, from 1900 onward, with one noticeable dip in the middle of the Great Depression.

In 1946, the birthrate exploded to 3.47 million, a 24% increase in one year! New births broke the 3.5 million mark for the first time in 1947, 4 million in 1954, and peaked at 4.3 million in 1957. They didn’t fall back below 3.5 million a year until 1971, and then didn’t reach the 4 million mark again until 1989.

In 20 years (1945-1964) the United States had added 78 million new, natural-born citizens to the population. By 1965 the US population had grown to about 195,000,000. which meant that two out of every five people in America was under 20 years old!

This was the uniquely American phenomenon that was to influence everything for the next sixty years. The impact of the Baby Boom has changed social and cultural mores, the job market, business structures and economics. As they exit the workplace, the Boomers will have one more giant shift to their credit, and it will change the face of small business in America.

If you are a Boomer business owner, know a Boomer business owner, or provide services to a Boomer business owner, I encourage you to share this first chapter of the series. By the time we reach the end, I can promise you that you will view the next ten years in a whole new light.

Posted in Exit Planning, Exit Strategies, Thoughts and Opinions | Tagged , , , | 3 Comments

3 Responses to The Approaching Tidal Wave

  1. Brad Elmhorst says:
    March 12, 2012 at 1:45 pm

    Looking forward to the next installments.

    Reply
  2. David Girault says:
    March 12, 2012 at 3:22 pm

    Great teaser to the rest of the series.. As a Gen X’r trying to work with a Boomer boss on potential exit strategies, this is spot on.. On a different level, living in deep South Texas, where today, over two in five people is under 25, I am curious as to what we can do as a region to create the type of economic renaissance that America experienced as the Boomers came of age….

    As always, Good Stuff, John!

    Reply
  3. Kelly Rainford says:
    March 16, 2012 at 10:02 pm

    I have always known that the generational impact of the Boomers has been undervalued in business. As this high-powered generation gears up for retirement, the last thing we should do is wait to see what will happen. In fact, I have watched as this influential generation has struggled to step aside and actually retire. New retirement ages and redefining retirement as launching a consulting career are a part of this.

    In addition, Generation Y is coming on to the scene, uninterested in playing by the Boomers’ corporate rules. What I am wondering is, how will Generation X stay in the game as the business rules are being rewritten?

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Hunting vs. Farming

Posted on March 4, 2012 by John F. Dini

At the family gathering, you are being introduced to a distant cousin you haven’t seen since childhood. The introduction usually includes your status as a business owner. “Do you remember little Cousin Bobby? He owns his own company now.” Or you hear it as you pass a conversation; “There goes Rebecca. You know, she has her own business.”

 You know what they are thinking. It may be the somewhat awed tone of being in the presence of success, or a “Who would believe it?” skepticism. When you are a business owner among non-owners, the undercurrent of envy and admiration comes from certain commonly held beliefs about the lifestyle of a business owner.

 You pay yourself as much as you want. As the holder of the checkbook, you can just decide how much salary you need, and take it. After all, if you determine other people’s compensation, so you determine your own, right?

 You only work as much as you want. No one tells you to be in the office by a particular time. No one orders you to stay at your desk until a deadline is met. You can’t get fired for leaving early. You don’t have to accrue vacation. If you work a lot of hours, it’s probably just because you like money so much, and want more. (See belief number one, above.)

 You only do what you want to do. That’s why you have employees. You can pay people to do whatever you don’t like to do. You write your own job description, as well as everyone else’s. No one is crazy enough to write a job description for themselves for a job they wouldn’t want to do! (Are they?)

 Of course, you are probably smiling right now. We know what it takes to start and build something that achieves that level of freedom. It can take years to get there, and it’s seldom an easy road. Many of us never make it that far.

 But it could be true. The vision other people have of an ideal entrepreneur’s life isn’t wrong, it is merely miss-timed. The entrepreneur always believes that such a lifestyle is in the future, it just isn’t here yet. It will just take a lot of work, a lot of talent, and at least a modicum of luck to make it happen.

 It should be true. Along the way, however, many (if not most) entrepreneurs stall in the  “lots of hard work for inadequate reward” stage of building a business. It happens because as the business grows, they are drawn away from what they enjoyed the most, from what they were best at, and into what the business demands that they do. They become farmers.

 Management is farming. Balancing the checkbook is farming. Paying the rent is farming. Locking up the business at night, or opening it in the morning is farming. Purchasing supplies is farming. Writing procedures is farming.

 Bringing in new sources of revenue is hunting. Finding and training great employees is hunting. Closing deals is hunting. Outmaneuvering your competitor is hunting. Motivating people to excel is hunting.

 As an entrepreneur, you owe it to your company, your employees, your customers and yourself not to get tied down in farming activities. You started your business to do what you do best- not so that you could teach yourself a set of skills that you have little inclination to learn.

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Posted in Entrepreneurship, Life After, Thoughts and Opinions, Uncategorized | Tagged , , | 1 Comment

One Response to Hunting vs. Farming

  1. Donna says:
    March 11, 2012 at 10:23 am

    Great advice; I’m tempted to pass it along to the entrepreneur I’m employed by. He is seriously conflicted, loves the “hunt”, as he should, but micro-manages “farms” his staff to the point of self destruction.

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Absence Makes the Heart Grow Fonder (Not!)

Posted on February 26, 2012 by John F. Dini

When you are in love, separation from your loved one is painful. The longer you are separated, the more you want to be together. The saying is attributed to Thomas Haynes Bayly, a popular (but fairly light weight) writer of the early 19th century. Ironically, the popularity of the phrase he coined has far outstripped his reputation.

The effect is opposite in business. Physical separation is often the cause of friction, misunderstanding, resentment and defensiveness.

Anyone who has managed multiple locations knows the phenomenon of “branch mentality.” The employees in a remote company location resent the “interference” of the corporate office. The folks in corporate don’t understand how hard it is to compete out in the real world. They are focused on reports more than results. They operate on theory rather than practicality.

In the main office, the complaint is that the employees in the field don’t follow the systems. They make everyone’s jobs harder by doing their own thing, ignoring deadlines, and communicating poorly.

Any sales manager has heard salesmen complain that the company’s prices don’t work in their markets. Their customers are unique, and want different products or different services.

Every franchisor knows that an unsuccessful franchisee will blame the poor systems, marketing or support of the franchisor. The successful franchisee, of course, is successful only because of his or her own skills and innovation in the local market.

And then there is email. A separate column, actually a separate book, could be written about email. Email battles seldom start between people who see each other every day. The begin because people who don’t see each other try to influence behavior remotely. Their message is urgent, but isn’t responded to in what they consider a timely manner. They try to tell others what they should do in an email. They copy the boss, or coworkers, or hit “reply all” with a criticism.

The solution to every one of these scenarios is the same: face to face communication. Sociologists say that as much as 85% of our interpersonal communication is through body language. Try this the next time someone asks you for a report:

Say “You are such a stickler for deadlines!” face to face with a big smile and while rolling your eyes comically.

Say “You are such a stickler for deadlines!” face to face, with a scowl.

Say “You are such a stickler for deadlines!” in an email. Now copy the email to five other people.

How would the reaction differ? The first one you are likely to get away with, even though what you said might not be appreciated. The second is bound to generate some defensiveness. The third starts a war.

As the owner of a business, your leadership responsibilities include spreading the culture of the organization, and making everyone part of the team. It’s easy to “forget” the folks in the field as long as they are doing their jobs. In truth, they need twice the contact of the people who see you every day.

Include remote workers in regular meetings. Conference calls are better than memos, because employees can give immediate feedback. Skype or other web-based video conferencing tools are better yet.

Limit the number of central office employees who can broadcast to the people in the field. It is frustrating to receive multiple emails on the same topic, or to open a string of messages from accounting, operations, sales and marketing. (“Don’t those people have anything else to do but send emails?”)

Most importantly, get people face to face. Send employees from the main office to visit those in the field, not to inspect, but to learn. Bring remote personnel into the main office periodically to meet the people who support them.

It can be difficult to budget an expense for activity that seems to lack specific purpose; but what better purpose can you have than a company where people work together more effectively?

Posted in Leadership, Management | Tagged , , | 1 Comment

One Response to Absence Makes the Heart Grow Fonder (Not!)

  1. Joe Zlotkowski says:
    February 26, 2012 at 4:38 pm

    Good discussion. I am especially interested and working on ways to effectively use remote technologies like Skype, webex, and communicator.

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