The Entrepreneurial Epiphany
Posted September 6, 2011 by adminBack in 1998 we were pursuing a second location just outside of Atlanta. It was a new open point which had become available for three metric OEM’s due to several local dealers recently going out of business. After thorough market analysis we felt this was a great opportunity and decided to aggressively move forward. Against my better judgment we hired a former employee as the ops manager to lead the project and empowered him to do much of the hiring, vendor set up, and many other responsibilities as required for the launch of the new location. This former employee, (now re-hired) always exuded an “I’ve forgotten more about this business than you know” condescending attitude in our previous relationship. However, during the new interview process he seemed humbled by his negative experience after leaving the first time and assured us he was very much appreciative of this great opportunity, was in it for the long haul, and if given the opportunity would prove it to us.
Yeah right, and Obama is gonna make the healthcare program negotiations “transparent” too.
Anyway, little did we know during the startup he was studying our every move, documenting our vendor contacts and essentially being provided a blue print on how to start his very own dealership. Apparently, he had some financial horsepower from within his or his in laws family and in a very clever move bought out our local competitor. I’ll never forget the cocky smirk on his face when he notified us of his new venture by saying “Well, we’re now peers”. Quicker than you can say ‘conflict of interest’ this guy had spent his time on our dime learning the whole enchilada…. everything there was to know about a start up from our employee comp plans to how much we paid for monthly alarm service to where to go to get a good deal on merchandising fixtures. Heck, he even knew roughly how many units he could expect to sell on a monthly basis if he did the right things. Too bad non-competes aren’t worth the paper they’re printed on.
Slowly but surely he began picking off our key employees by offering them wages above and beyond what he knew they were making with us. Unwilling to negotiate their pay I stubbornly let them go.
Although this did inflict pain upon me, I knew my numbers well enough to understand that the model could never prosper if I over paid for labor, just as it could never work if I sold every unit at cost with the intentions of making it up on volume.
It was during this time period that I learned many valuable lessons, two of which were:
As a business owner you can never allow your business to be completely people dependent. Your business must be run by the systems, and the people run those systems.
People come and people go, it’s not personal, it’s just business and you’d better be prepared to handle it.
I look back on this situation with great gratitude and harbor no ill will towards this former employee. He was just doing what was best for him and his family, and the fact he was a bit pompous in the process was just his nature.
It was because of these circumstances, a splash of alcohol and a good book on the beach that I had what I now refer to as “The epiphany”.
I’ll get back to the epiphany in a minute, but first a quick story.
In 1952 a fifty two year old feet on the street milkshake salesman walked into a local hamburger stand in San Bernardino California to make his regular pitch. What he witnessed was not just your regular hamburger joint; it was a well oiled money making machine. Burgers were being produced systematically, efficiently, consistently, and best of all, nearly anyone with a pulse could do it!
After observing system on top of interdependent system consistently satisfy the long lines of customers Ray Kroc persuaded Mac and Jim Mac Donald to allow him to franchise their model. Twelve years and several million burgers later Ray bought out the brothers and had created “The Most Successful Small Business in the World”
Within forty years Ray Kroc had built a $40 billion dollar business with over 28,000 locations worldwide and still growing. But what Ray Kroc did was not only profound for his industry, what Kroc did would eventually revolutionize the way entrepreneurs viewed business. Kroc proved that to build a truly great business you had to go to work not just in your business, but more importantly on your business to build systems and process that produced consistent profitable results without complete dependence on highly paid personnel.
After originally reading this story on the beach years ago it hit me. The moment I know refer to as “The Epiphany”. The difference between building a business versus just owning a job was Systems!
The word ‘System’ is a great acronym which stands for Save Your Self Time Energy and Money.
By the way, my ex employee would eventually sell out to the same consolidator who bought our stores and they (the consolidator) would move the entire operation under one roof with all major metric OEM’s. Eventually, win –win for all.
