Trading One Boss for Twenty

You're really busy. At least that's what I hear. There might be some tougher times ahead, but you made some early adjustments and now the slimmed down crew is just slammed trying to get the work done.

I'm busy, too--lots of clients, for which I'm grateful. So I'll keep this short, but I kind of hate not writing you at least once every week.

Remember when you quit your job and started your current firm? A lot of people thought you were crazy. In fact, some of you probably were. I can't tell you how many firms were birthed in the 2008/2009 melee, so if you're one of those firms, they kind of had a point.

But look at you now. Well, not right now, but just before now. And because I want to talk about one aspect of your adventure, look back specifically at why you started your firm.

It was because you didn't want a boss. Or at least you didn't want the one you had. You weren't afraid of the hard work, the inevitable mistakes, or the financial pressure. You just didn't agree with the way things were run and you were feeling this itch to go it alone and see what you could build.

Some of you were content with smaller, high-performing firms. Some of you chased being on the "Fastest Growing" Inc 5000 list year after year. (For the record, I'll never understand that latter group. Such a silly thing to chase.)

But the one thing that all of you wanted was to be your own boss. You wanted to forge a culture, build something you could sell, explore your own IP, and impact the world at your doorstep.

Notice what I haven't mentioned in that list: money. A lot of you thought about money, but you were content to build the right thing, feeling pretty confident that money would come later. And for some of you, it really did. I have worked with principals who make between $80,000 and $1.8M per year. Few of you started your current firms for the money.

But let's get back to the real reason you started your firm: to be your own boss. What you discovered at a later point, though, is that you were trading one boss for lots of little bosses. That's what your clients are (cue the illustration above).

Still, your current situation is so much better than before, because you can "fire" one of those bosses and in most cases it doesn't have a huge impact on your firm. Even if you don't have a client who needs to be fired, I joke sometimes that you need to have an annual firing just to keep them guessing.

This comes up in my discussions with a client who has received an acquisition offer. I explain that there's a delicate balance in how the terms are so much more important than the sale price. For example, say a firm of 18 people is getting purchased for $3,000,000. If 20% of that is paid in cash at closing, then typically the remaining 80% will be tied to some sort of earnout, and you won't see that money unless you hit certain performance targets.

In other words, you still have a boss after the transaction...and you still have that entrepreneurial pressure! Heck no. If you're still going to have a boss, you need to shed (most of) the entrepreneurial pressure.

But back to my point.

You started this firm to gain control over your work life. You still have that control. Use it. There are so many fantastic things you could do to make this company work for you instead of slogging to work every day trying to make do what you need to do to make this thing work for everybody else.

I see more examples than ever of principals who are making courageous decisions. I'll be ready if you ever need my help trying to figure that out specifically for your case.

Meanwhile, join me this Friday at 2:30p central for a look at "Handling that Acquisition Offer Smartly...Before You Hire an Advisor". It's not a good idea to hire an advisor right away, not just because you'll waste money but because some of what you need to learn about the acquirer is best learned on your own.

In this webinar, I’ll teach you the appropriate steps to take at the outset, how to evaluate the seriousness of an offer, how to limit the silly requests that they’ll make of you in the early exchanges, and when it might make sense to engage with an outside advisor.

This content is pulled from a seminar that’s normally $1,800, but it’s free to help you navigate all the M/A activity that’s happening currently.

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