How do you get off the hamster wheel?
Contractor tip of the month
By Damian Lang
Just building a successful construction company isn’t enough. You have to have a succession (continuation) plan to keep it prospering without you. With no succession plan, you may end up like Bob, who is running hard, but just can’t seem to get off the hamster wheel.
Bob built a really successful construction company. At 65, after 35 years, he was ready to retire. He assumed his daughter or one of his two sons would take over the company. Then, he could watch it grow and enjoy the fruits of the profits during retirement. His daughter, Darla, had the most potential to run the company, but Bob never developed a succession plan, nor did he share his company vision with her. He thought Darla knew she’d own some or all of the company someday. Without the long-term picture painted for her, Darla became bored with construction, went to work with her husband in the banking business, and moved several states away.
Bob’s eldest son, Bill, wasn’t crazy about construction. After working several years with Bob, he decided to take a manufacturing job. His son, Ray, had issues with drugs, and although he was still with the company, he wasn’t a candidate to run the business. Bob realized he had no choice but to sell the company. After putting everything he’d ever made into building the company, and with the profits it made year after year, he figured it would fetch a pretty good selling price.
Bob figured wrong. Unlike most businesses, construction companies are only worth what they can earn in the future with the management team they have in place to drive earnings. When Bob put the company up for sale, he discovered there were no buyers. He went to his managers to see if they were interested in purchasing the company. Although fond of the company, none was prepared for the undertaking. There is not much good will to offer when selling a construction company, and worn out equipment isn’t worth much on the open market. His only choices were to sell the tools and equipment for pennies on the dollar or stay on the hamster wheel.
If Bob had created and shared the vision for the succession of the company with his children or managers, and given them an opportunity to purchase minority shares of the company over a number of years, the management team that was needed to continue company operations would have been in place. That would have been the start for the eventual selling of his remaining ownership. He’d be facing a very different future, earning income and profits while retired! Instead, at 65, it’s all over for Bob’s company.
I can’t tell you what happened to Bob, because he is a fictitious character. I can tell you that Bob’s story is how it ends for most construction company owners. How do you assure you don’t end up in the same situation as Bob? Develop and/or partner with future leaders to succeed you. If you start the planning process in advance of the day you’ll decide it is time to walk away or you’ll want more time for yourself, you will be setting yourself up to get off the hamster wheel, before wearing yourself completely out.
Being 50, and privy to many “Bob” endings, I have already started transitioning ownership to some of the managers of my construction companies. I have shared 33 percent of my masonry business and 28 percent of my general contracting business to those I have identified as future company leaders. By the time I am 55, these managers will have purchased their shares from me with company profits.
At 55, I plan to share more ownership (up to 49 percent) with these or other managers I see have the potential to drive the companies to better profits than we have ever experienced in the past. At 60, I plan to let my majority of the company ownership go to these owners or other chosen future leaders. I’m excited about this plan and those I am sharing my vision, plans and profits with are ecstatic about it.
If you have built a business, regardless of your age, start developing and sharing a vision for the next generation of leaders that can continue to run your business without you. This way, you can kick back and enjoy some extra time off, or at the very least, enjoy the retirement you so deserve. If you have a child who is truly capable of managing the business in your absence, treat that child just like you would any other leader in sharing the vision, and eventual ownership.
Don’t take it for granted that he or she already knows your vision, and will always be there. As for me, if all goes the way I plan, I will be able to cruise at 60, or the age I decide to turn over my total stake in the companies to my successors. This is also the time I will be working with them to pick their own successors. Then, when the time comes that they are ready to walk away, they can get off the hamster wheel, too.
About the Author
Damian Lang is a mason contractor in southeast Ohio and inventor of many labor saving masonry systems and products. Lang has served as the Marketing Committee Chairman for the Mason Contractors Association of America. He is also author of the book Rewarding and Challenging Employees for Profits in Masonry. To network with Damian on contractor tips or tips you have and would like published, contact him at email@example.com or 740-749-3512.