Business owners are generally pretty good at imagining what comes next. Getting there can be another story.
A recent JPMorganChase survey found that 70% of small-business owners were either in the early stages of succession planning or had no formal plan. Only 8% considered themselves fully prepared. The findings appeared in a recent Fortune article examining Jamie Dimon’s concerns about the American Dream and the coming wave of business ownership transitions.
I keep coming back to the distance between knowing what you want and being willing to make the investment required to get there.
An owner may want to expand into a new market, acquire another business, or eventually sell the company and pursue something completely different. Those ambitions come with financial decisions that become considerably more complicated once the business is established.
There are employees to pay, customers to serve, and a company that has taken years to build. Suddenly, taking a chance feels a lot more expensive than it did in the beginning.
There are good reasons to protect what you’ve built. I’m less convinced that protecting it should become the reason you stop pursuing what you want.
Having more to lose changes the conversation.
I find it interesting that we celebrate entrepreneurs for taking risks when they start businesses, then become increasingly cautious about those same decisions as their companies mature.
In the beginning, there often isn’t much to protect. An entrepreneur may have savings, a business plan, and enough confidence to convince a few people to take a chance on them. The risks are significant, but the decision is relatively personal.
Years later, that same person may be running a profitable company with dozens of employees and a comfortable income. An opportunity comes along that could substantially change the business, but pursuing it would require an investment that makes the owner uncomfortable.
The financial consequences deserve serious consideration. So does the possibility that the opportunity might be worth pursuing.
I would be suspicious of anyone who tells a business owner to take a major financial risk simply because they should believe in themselves. Payroll has a remarkable way of making inspirational advice less appealing.
The decision deserves better analysis than that.
You can think big and still be thoughtful about risk.
Sara Blakely’s story is a useful example.
Before she founded Spanx, Blakely spent seven years selling fax machines. Yes, fax machines. She had saved $5,000 and wanted to create a product that didn’t exist in the market. She had no experience in fashion or retail, and manufacturers weren’t particularly interested in helping her.
She continued working while she developed the product, spending nights and weekends researching patents and trying to find a manufacturer. When attorneys quoted her thousands of dollars to prepare a patent, she bought a book and did much of the work herself.
It took roughly two years to get Spanx into Neiman Marcus. She was still working her regular job when the product began attracting national attention.
Blakely had every reason to be concerned about losing her savings. She also had an idea she wanted badly enough to pursue. Keeping her job gave her the income and health insurance she needed while she worked toward something much bigger.
Of course, knowing how her story ends makes it easy to admire the decision. Plenty of people make thoughtful investments in promising ideas that never become successful businesses.
What interests me is how deliberately she approached the opportunity. She was willing to commit real resources to something she believed in while managing the financial exposure she could control.
An established business owner considering a major investment has the opportunity to apply that same thinking.
What would it actually take to make the leap?
Consider the owner of a profitable company who has spent two years talking about opening a second location.
The opportunity looks promising, and customer interest is strong enough to justify exploring it. Still, every budget cycle brings another reason to postpone. Construction costs are higher than expected, an important employee leaves, or the economic outlook changes. The expansion remains part of the long-term strategy, but nobody has established what would make the owner comfortable enough to proceed.
By the third year, I would want to understand what we’ve actually learned.
Perhaps the numbers no longer support the investment. That would be valuable information, and the company could put its resources toward something with a better expected return.
But if the opportunity still looks attractive, continuing to wait deserves the same scrutiny as moving forward.
The company could test demand in the new market before committing to a lease. It could identify the sales required to support a local team and establish how much it can afford to invest before the expansion becomes profitable. The owner might discover that the company has the financial capacity to pursue the opportunity in stages.
They might also discover that achieving the growth they want will require accepting more financial exposure than they initially anticipated.
Either way, they finally have something useful to make a decision with.
The risk of doing nothing deserves a place in the conversation.
Business owners are accustomed to calculating the cost of a major investment. They have to be. A new location that fails or an acquisition that doesn’t perform can leave a company with financial obligations long after the initial excitement wears off.
I think we’re less disciplined about evaluating the opportunities we repeatedly postpone.
There are businesses that remain in markets they’ve outgrown because expanding would require a substantial investment. Owners who want to pursue an acquisition but have never developed the management team needed to operate a larger company. Founders who know they would like to sell in five years but continue delaying the improvements that could make the business more attractive to buyers.
Every year spent waiting reduces the time available to make those ambitions possible.
And waiting is easy to justify when the business is doing well.
This is where I think an owner’s willingness to want something bigger matters. A successful company creates options, but someone still has to decide which ones are worth pursuing and commit the resources required to pursue them.
Give ambition a real place in your business plan.
I encourage any owner considering a major change to get specific about what they’re willing to invest to make it happen.
Start with the outcome you actually want. Then understand what the company would have to accomplish to support it, what the investment will cost, and how much financial exposure you can reasonably tolerate. Some changes may require bringing in outside expertise or developing people internally before the company is ready to move forward.
You can calculate the risk, make the plan, and prepare for every reasonable outcome. Eventually, you have to make your move. Fortune favors the bold, but only if they’re willing to act.
