Adventures with Lyrical: Buying a Business (REPOST)

BrutulTM_sl said:

It is pretty tough to find somebody who is smart and ambitious enough to do a great job for you, but not smart and ambitious enough that once they learn the business they will realize they would make a lot more money doing it on their own instead of drawing a salary and making tons of money for someone else. I think Lyrical's mistake is that he's looking for somebody that doesn't really exist. No one is going to be as motivated to make money for your business as you are. Why would they be? If they're going to kill themselves, they're going to do it for their own business, not for yours, and if they are willing to work for you on a salary it's probably because don't want to kill themselves at work every day. It's just one more thing you have to deal with if you run a business.

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This sums up my thoughts completely. People with intelligence, motivation, and ability to relate to people are going to start their own thing or find someone that compensates them appropriately for that rare skillset. I wonder if estimators would stick around if they had the ability to buy into the business and become a part owner.

I'll say it again, the only long term solution is profit sharing/bonus and growth. Give someone the opportunity to make a ton of money and they'll stay with you long enough while it's on a growth curve, otherwise they'll ultimately not be fully vested or they won't stay long enough that you'll always be retraining a new person, even if you pay really well from a salary. Lyrical has stated he's had people 'go out on their own' then ultimately fail, but regardless of the smile on his face, most of the time people are retarded and burn bridges meaning that he can't hire them back (or wouldn't want to).

There's people in many sectors who are very experienced but don't want the overhead of dealing with a business from $$ to HR to liabilities who will work for good change, provided they can write their own paycheck with good work. Doesn't mean you need to give them 'shares' or control or anything, but you do have to pay for what you want.

Maybe I'm bad at business. But I think the most successful business model that works is to profit share with employees. The guy who replaces you should be like 10% of profits. Then split 10% amoungst the crew based on longevity etc. You keep 80%. This allows you to actually step away from the company. Anyone who is smart would love that deal. Who wouldn't want 60k or 80k salary plus 10% of profit. They also own part of the company essentially with 0 risk, and it's sweet so they don't want to strike out on their own.

Meanwhile most business owners think. OMG. I'm not giving up 20% of my profits! I worked hard for it etc. The reality is you'll give up that 20% either way. Be it from employees fucking you, or down time while training the 10th new guy this year etc. Also how much money are you giving up by not building the next business?

It can't be that hard to find someone offering a good salary, then showing them the profit last year was X. You get 10% of that. With X being the expected growth each year. You accomplish that, you retire very rich. You don't accomplish that, I will find someone who will.

Unfortunately it's just not that easy. You are making a lot of assumptions about the individuals working for you, their forethought and business acumen. I can't count the times I've seen middle management put their short term gain (bonus) above what was best for the company long term. Even if the decision ultimately negatively impacted their bonus for the next year or two they would still do it without even realizing they were shooting themselves in the foot. Overworking employees, not purchasing required supplies, not performing maintenance on expensive equipment, selling product at a lower cost to hit revenue goals before year end, etc.

If your company's goals are not what is rewarded with a bonus structure you did it wrong.

Palum_sl said:

If your company's goals are not what is rewarded with a bonus structure you did it wrong.

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This.

I too believe in profit-sharing as a motivational tool, but as Ortega pointed out there are definitely potential pitfalls you need to avoid. A book that I thought was a great read on the subject wasOwnership Thinking: How to End Entitlement and Create a Culture of Accountability, Purpose, and Profit: Brad Hams: 9780071772457: Amazon.com: BooksNot every aspect outlined in the book will be appicable across every industry, but definitly helped me revamp my bonus program to ensure growth.

Ordered the book. Been a while since I fell into the rabbit hole of business books. I need to space them out more as I tend to read 2-4 at once, then I forget ideas I wanted to implement.

Celestein_sl said:

I mentioned way back(possibly in the foh edition of this thread), that sharing structures and bonuses/profit sharing is hard. When you examine available data, the truth is most employees are negatively motivated by bonus structures, seasonal raises, and profit-sharing. Every aspect of them sounds like a good idea, but in reality they don't work for the most part. It's one of those business aspects that's counterintuitive to the point of seeming like lunacy.

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This is all very true. One of the biggest challenges I've had with my bonus program is that the employees start treating it like an entitlement. Rather than being motivated to perform better and examining their what went wrong when fall short of the set goals, they just become resentful when they are not awarded their bonus. One of the things that I've found very important is to give them the tools and authority (access to data) to track their own progress in real time.

OU Ariakas said:

Did @Lyrical never make it over to this site? I miss the updates on his business.

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Shonuff is Lyrical pretending he isn't.

Chapter 11?

Just to make it fun, there is also a @Sho'nuff