Small business represents more than 99 percent of all American employers, employs more than half of the American workforce, provides just a little less than half of this country’s sales, and represents 96 percent of all U.S. exporters. Yet fewer than 5% of all small businesses survive to see their fifth birthday.
Why?
Some say its due to a lack of knowledge, a missing skill-set or hyper-specialization. I agree that skills and knowledge are critical but sometimes I think this huge failure rate has a bit to do with overconfidence.
Let’s face it, making the transition from “employee” to “employer” is not as easy as it looks. As an employee we had it pretty good. The owners took all the risk. True, when business was good they bought themselves a new Mercedes but if business was bad, they took the hit and I still got my salary. I didn”t have to worry about workers comp, insurance, OSHA, labor laws, lawsuits, competition, soft-sales, rising expenses and a plethora of other issues.
As employees we were “dependent” on the owner to absorb the risk and compensate for any losses or downside. Some owners may feel this “dependence” translates to a form of employee entitlement. Yet the owner takes the risk and the owner enjoys the reward.
Many employees on the other hand have come to believe that they are owed more money, more health care, more retirement benefits-more of everything that is costly to the owner of a business. Business owners often feel as though they deserve to take as much out of their companies as they wish sometimes not fully funding initiatives which can create a difficult working environment for employees. How can this dichotomy be reconciled?
I think it is deeper than simply saying we all need to take responsibility. I think we need to change our mindset about independence and entitlement. And I think we need to teach our employees to think like owners. Some have gone so far as to actually make their employees owners.ESOP (Employee Stock Ownership Plans)
In 1994 United Airlines became the largest employee majority-owned enterprise in the United States, with various groups of employees mostly represented by unions – having purchased 55% of its stock in exchange for various concessions. The employees accepted pay cuts and made other concessions, but were also granted representation on the company’s board of directors. The case represents the potential of an Employee Stock Ownership Plan (ESOP), but not the full realization of that potential. It shows that an ESOP may be a necessary condition but certainly is not a sufficient condition for substantial changes in labor-management relations leading to improvements in company performance.
| It requires more than just giving an employee some stock to get them to think like an owner. It all starts with the mindset of the owner themselves. For small businesses it is critical that they not allow overconfidence to overshadow their decision-making ability. This is the danger of becoming too independent.
Becoming Too Independent If you are one of these small business owners you might be saying, “Hey isn’t it great? I’m finally independent! No more working for the MAN!” Coaching Re-enforces Interdependence Growth for even the most successful organizations can be hindered by a resistance to change and an attitude of fierce independence. This can happen externally among customers as well as internally with employees. Business coaches help owners, managers and key team members to set specific goals and break them down into manageable pieces and to effectively collaborate. Coaches hold team members accountable but they also ensure that there is a high level of interdependence. Interdependence Breeds Attraction I’d love to hear how you’ve become more interdependent in your organization. Email me at mark@markdeo.com. And remember to make Tuesday morning, “Interdependence Day.” |
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| Have a great week! I hope that this “Business Update” has been helpful in assisting you to improve the performance of your organization. For more information on how the Small Business Advisory Network assists companies in improving their performance, please feel free to contact us at 310-320-8190 or email mark@markdeo.com Mark Deo |