Question: If you're on the railway tracks and you cover your eyes and ears to avoid a train barreling towards you, will you still be squashed like a bug?
This is not a trick question. The answer is "Of course you will!!!" Physics works the way it's supposed to. A train going 100 km per hour won't even feel the bump. Your choice to be oblivious to the impending disaster doesn't change physics. You could say, "I hate physics!" but physics doesn't care. It will continue to operate as it always has.
If you are a baby boomer business owner who has chosen to disregard the impending tsunami of change that's about to hit our generation, you're no smarter than the person on the tracks. In the very near future, a giant, destructive wave will sweep through North America laying waste to the businesses, employees, families and customers of entrepreneurs who have covered their eyes and ears in a misguided attempt to ignore physics. Communities will be affected. Unemployment will soar.
What's the big deal? In the next three to 10 years, millions of Canadian businesses will change hands as the boomer entrepreneurs slow down or retire. Because of the wave, you may not be able to sell your business for what you want—or at all. According to Andrew Rogerson, author of Successfully Sell Your Business, only one in three (U.S.) businesses with over 100 employees are able to sell them when put on the market. For companies with less than 10 employees, the number is only one in five! If only one in five will sell in more normalized times, what will happen over the next 10 years when it will be anything but normal as a massive number of baby boomers look to sell or transition their business?
The wave metaphor creates an interesting image. Can I prove that it will happen just like that? Predictions can be wrong, but ignoring them completely can be construed as willful blindness, a phenomenon labeled by Margaret Heffernan. In her book of the same name, she lists several examples of well-known historical events, which in hindsight had all the markers of a pending catastrophe but people paid no attention to the information in front of them. Nazi concentration camps, Enron, Bernie Madoff and the subprime mortgage disaster all had indicators of problems long before each crisis peaked. But most people averted their gaze and chose not to believe the signals because the truth was too hard to stomach.
The 'fiscal cliff' in the U.S. is an early warning signal. The failure of European countries like Greece is another. The fall of titans like Kodak, Hostess Brands, Lehman Brothers and 465 U.S. banks from the start of the financial crisis in 2008 through the end of 2012 is still another.
'Too big to fail' is an argument that lacks substance and credibility in 2013. 'It's too early to plan' is another. What should you do?
- Confront the wave. Open your eyes fully and look at it. Get the facts. The wave doesn't care if you see it, hear it or acknowledge it. It's still coming.
- Be honest. Tell yourself the brutal truth. This is not the time for rose-coloured glasses. Look at your business objectively, realistically. Get a professional valuation. Consider your options. Involve your spouse. He or she will help.
- Get off the tracks!! Establish a sense of urgency especially in yourself. Your employees will resist change and try to stick to business as usual. It's up to you to push beyond the status quo.
- Your business should always be ready to sell. It takes a few years to get it ready if you haven't already started. Get it ready.
- Prepare your management team to be able to run the business without you. Take more time off, more vacations and coach them to make better decisions on their own.
- Get to know some business brokers and find one you trust.
- Find a successor if you want to keep the business, someone who can take it to a new level and maybe become an investor or partner.
- Develop and document processes, best practices and policies so they can be followed even if you're not there to direct and manage them.
- Begin to draw more money out of the business and reinvest it. Diversify your assets. But don't bleed the company dry. It still has to show a profit to be sustainable.
- Get a business coach who can help you stay focused on doing what's in your best interests, even if it's uncomfortable now.
Today the water's up to your ankles. You may still have time to act, but it's rising. Move!
Wayne Vanwyck is the founder and CEO of The Achievement Centre International in London, Ont., and Callright Marketing Services in Kitchener, Ont. He is the creator of The Business Transition Coach Forum, the author of the best-selling book Pure Selling and his recent book The Business Transition Crisis: Plan Your Succession Now and Beat the Biggest Business Sell-off In History. He has been training and coaching business owners for the past 28 years.
More columns by Wayne Vanwyck