You can be your own worst boss

SMALL business owners and budding entrepreneurs have lots of questions on success and survival. Scott Pape sets out to answer some of them.

Big gear, small gear. Cogs. Machinery. Generic image.

I GET a lot of questions from small business owners and budding entrepreneurs.

For the record, the only qualification I have as a small business adviser is that I’ve been running my own business for nigh on 15 years and haven’t gone broke (yet). I have no MBA (which I believe stands for “More Bad Answers”) and, truth be told, the only reason I’m in business for myself is that I’m totally unemployable.

So let’s get down to business.

THE MILLION-DOLLAR IDEA

I’VE written to you a number of times but never heard back. But I will keep trying. I have stumbled upon a game-changing idea in the education space — no one is doing it. Right now, I am part way through registering all my intellectual property, but I have spoken to some successful businesspeople and they agree it has the potential to be huge. I’d like to talk to you about it confidentially if you are willing to sign an NDA (nondisclosure agreement). Looking forward to talking to you — it’s potentially highly lucrative.

Brad

HI Brad, don’t worry about anyone stealing your idea. If it’s any good, you’ll have to ram it down the throat of people for years before they even give you a second look. NDA? LOL! (Seriously, my old boss at the ASX, Tony Hunter, called the Barefoot Investor “a dumb idea with a bad name”. Thank you, Tony. If I’d taken your advice, I could be a middle-level executive sitting in the office that is third from the corner office, right now!) Dude, unless you’ve invented a way to stop U2’s Songs of Innocence album from playing randomly on my iPhone, I’d respectfully argue that your “game-changing” idea isn’t worth a bunch of Bono’s sunnies. New ideas are too risky. You have to create a brand new market. That’s expensive. What’s more, why haven’t the established players done it already? And what’s stopping them from doing it once you show up? Better to be like Apple — knock off an idea, or merge a couple of existing ideas. Successful business is all about business models: profitable business models. Where are businesses that are already making money? Follow the money — just do it just a little better.

 

HE’S SUCCESSFUL AND SICK OF IT

I AM 48. Over many years, my wife and I have built a company. It keeps growing and we have good long-term employees (15 employees and 10 subbies), and I feel responsible for their ability to pay their mortgages. I love what I do but I am burning out — and drinking too much.

We earn a lot of money and take great holidays, but both my wife and I are fed up working 14-hour days. How do I find a new boss to keep this going?

Matt

Hi Matt, You sound burnt out. (I know because I’ve been there myself). That’s what happens when you feel you have a duty to provide for 25 families. And that’s also why you rightfully deserve the big bucks — it’s people like you who drive the economy forward. Here’s the thing: like most small business owners, you’re walking the self-employment tightrope because you want your freedom. The only problem is that you end up working for the worst boss in the world: yourself. Fact is, most small business owners have less freedom than the people they employ!

There’s no cookie-cutter answer to any of this, only the obvious: you’re not in the building game, you’re in the bringing-money-in-the-door game. You’re a salesman. Everything else you do in your 14-hour day should be outsourced to someone better (and cheaper) than you.

HUBBY’S A MAN WITH A VAN

MY husband runs his own painting business. He is driving an old heap that is on its last legs and he needs a new business vehicle. Our accountant has suggested a “chattel mortgage”, which sounds like a good deal at 6 per cent interest for $20,000 over five years. We have a lot of debt to pay off and want the most cost-effective option.

Lorraine

Hi Lorraine, the most cost-effective option is to pay cash for a second-hand van. However, if you don’t have the coin and can’t buy it out of savings, your accountant is giving you decent advice. Remember that as long as the price of the van is under $20,000, you’ll also be able to claim the Government’s accelerated depreciation allowance, which will potentially reduce your tax by $6000.

 

THE $2 MILLION QUESTION

I’M 41 and married with three kids under five. I’m a 50 per cent owner in a successful business that pays me $290,000 a year. My net worth is approximately $430,000, plus my share in the business, which is worth about $2 million. In four years, I’ll have to find $2.5 million to buy my business partner out, or else find a new business partner. What are your thoughts?

Clinton

Hi Clinton, you’re doing very well! But there are two ways you could still screw it up. First, you could get a new business partner in four years’ time. In all the years I’ve been Barefoot I can count on one hand the really successful long-term business partnerships I’ve seen (hello, John Farnham and Glenn Wheatley). Second, you could borrow a heap of money and put yourself under a lot of stress. I wouldn’t do that either. You’re already wealthy — why risk it? Here are the two choices that I’d make: I’d either sell the business when your partner leaves, bank a bloody big cheque, and enjoy watching your kids grow up; Or I’d talk to your business partner in the next few months about structuring an “earn-out”. That is, instead of being paid $290,000 a year, you make an agreement to earn a smaller amount each year and gradually buy him out. Why would your partner agree to this? Possibly for sentimental reasons, but primarily because you’ll pay him more over time — they’ll share in the upside. That’s what I’d do. Up to you.

Tread Your Own Path!

Originally published as You can be your own worst boss