Need Advice: Go it on my own, or stay the course?

[swordspider]

Ok, this is a REAL LIFE example I am faced with and I would like some feedback. I'll make it short and to the point and I appreciate your input.

The Setting:

- I make just over $100K and I am #2 in the company which is relatively small (25 employees) and in the construction industry (though we are doing fine in the downturn). I've been here for 5 years and I am 34.
- What we do is nothing special, we just do it well. We have a great staff of field technicians and we have an old-school way of doing things that customers appreciate.
- The current owner is a decent guy and I am friends with him, but I feel that he is mismanaging the company's assets and he definitely is not spreading the wealth. The other employees are beginning to see it as well. He is the owner though, and I respect that is his prerogative, but I don't fully agree with his philosophy or actions.

The Situation:

- The top foremen in the company and the field supervisor approached me and said that they are getting ready to leave for various reasons, mainly because they want more money (which is a valid request in my opinion) and they are tired of seeing the 'wealth' of the owner (who easily pulls in over $500K). These are the three most important people in the company besides myself as far as delivering our 'product' goes, hands down. The long of the short is they said if I create a new company they would follow me.

The Question:

- So the way I see it I have two paths I can take and I am truly at the fork in the road. I know I can run the 'new' company but I also know if I do this it absolutely will sink my current company. I'm not kidding, this would be the end for it. I also have 2 friends that have agreed to give me $100K each of startup capital (one of them a current customer who has a large job waiting for me and knows the situation and is also pushing for me to start anew). The fallout here would be unfortunate and the relationship with the current owner could never be recovered. In addition, the new company could not initially support all of the employees and likely 10 field employees would lose their jobs in the transition.

Path 1. Stay the Course. Am I being greedy? I make a great salary and I know I could reel in the 3 disgruntled top employees. I could even get the owner to give them raises if I pushed on him and gave him a 'big picture' recommendation/analysis. I could save the company and likely get myself a decent raise in the process. I will never be #1 though, and the owner is close to my age so taking over after he retires is highly unlikely.

Path 2. Go it on my own. I have the skills and if there was ever a 'secret formula' to steal, that would be the 3 guys that are already with me. We are free of no-competes and I have 2 very large customers who alone could cover all the annual income I would need to get up and running while I generated new business. There is truly close to no risk on the success of the new business, but, on the personal side of things there would be a huge fallout; and a huge 'et tu, brute' situation because I would literally single-handedly end my current company.


Your feedback is appreciated.

[Parvaze]

Setting aside the ethical issues and being pragmatic, without wanting to come off as callous, but if there are no non-compete, anti-raiding provisions and/or client/trade secret issues then your path is clear.

I will say though, that I've had a few senior employees over the years think that I'm "raking it in" at their expense and that they could do better and have gone off on their own and failed miserably so don't underestimate what it takes to set up, and more importantly, run a business with all the inherent risks. Good luck in your new venture! :-)

[KirkKimberley]

Always watch out for #1. You would be so surprised at how many people you THINK would go to bat for you. There really aren't that many. Go it alone. Good luck.

As Parvaze has said MANY MANY employees 'think' they can be the owner or boss; but when the time comes to put up, many realize there is more to it than what they saw sitting on the sidelines and criticizing. Many new companies fail because of the mindset of the newbie owners (an employee mindset).

If you feel you see everything he does, can handle A/R and A/P, and everything that comes with running an alike company, do it.

Good Luck to you.

Thanks,
Kirk

[bozzie123]

if you think you have the skills to do it on your own, and you are confident enough to do it, then do it!

No one ever becomes a millionaire working for someone else!

Good luck

Nick

[swordspider]

Parvaze/Kirk-

Thank you for your insight. Without sounding pompous, I run all of the 'business' side of things already so falling on my face would come only as a result of not being able to drum up business. With that said, our two major customers (comprising 60-70% of our total workload) have literally never spoken to the owner and have only communicated through me. The owner has unfortunately become so enamored in his personal life that he has no attachment anymore to the company other than to come in and make 'big decisions' to which I have already made for him and just set him up to make the decision I want him to. I know that sounds sad, but I am protecting the company and my job and the jobs of our employees (although clearly I am getting tired of it). At one time he was a phenomenal businessman but he became too content with not having to work that he doesn't even come to the office anymore (and yes he makes as much as I said because I run the books too). So here I am cutting him a $39,000 check every month and he literally spends less than one full work week in the office. I understand the boss has to retire some day, but when you do that you typically leave someone in charge. He won't relinquish that control and thus he has created this predicament where he stands to lose a lot.

[KirkKimberley]

You realize the goal is to get a business to a level where you can have someone else run it, and you reap the rewards right?

When you get to that level, ensure your #2 does not do your books!

Where are you located?

Thanks,
Kirk

[chanson]

I say do it. If you have the confidence, the resources, and the numbers look good... then go for it! Double check with a lawyer ont he legal implications before proceeding. A lot of companies have documents in place which you signed when you became an employee or sometime during your employment that state you cannot converse, contact or do business with any of their clients in a nature which is contradictory to your previous employers services for a period of 18 months(other legal jargon and nonsense included).

[bozzie123]

It is clear you do not want to do this anymore, so start up your own business, theres a chance some of your co-workers may help and you may even be able to contact some of the same customers

It ticks all the boxes of being a success

[swordspider]

You realize the goal is to get a business to a level where you can have someone else run it, and you reap the rewards right?

When you get to that level, ensure your #2 does not do your books!

Where are you located?

Thanks,
Kirk

Absolutely, but like Steve Jobs and Bill Gates when you step out you also really hand over the torch to the next leader. The biggest issue here is the stepping out has been done and the handing of the torch has not. Honestly, even if he gave the torch to someone else more deserving than me, that to me would still be better than just leaving the void as is now.

We're in the Carolinas.

As far as the no-compete, only one of the four key players who would be leaving has one (the last to join the team). As far as the clients, the ones of which I speak are requesting my services, so yes there is a bit of a fuzzy line there, but I'm not exactly going to them and saying "hey come with me".

[bozzie123]

Is there room in the market for another competitor? what do you think you could do better than the company you are working for at the moment? differentiation is the key to success, if you can improve upon anything then it may be enough to convince the current customers to use your company instead.

[swordspider]

Is there room in the market for another competitor? what do you think you could do better than the company you are working for at the moment? differentiation is the key to success, if you can improve upon anything then it may be enough to convince the current customers to use your company instead.

Thanks Bozzie. Yes there is room because of the specialized nature of the company, but with that said the customers have become accustomed to working with the 4 people who are leaving and have never been contacted by the owner. It would almost seem 'weird' to them to have the owner call them because they haven't talked to him ever and call us all directly on our cell phones. In addition, these relationships have all been built by these people and they are who will be the ones to maintain them, the 'namesake' of the company doesn't mean a whole lot to them, it is the ability of the people they are contacting to see the work through that matters.

If you look back at my original post, I was trying to make a point there that if I split off then the company I currently work for will fold. It won't happen immediately, but the hit it will take will be irreparable. Again, that sounds egotistical, but the impact of the people leaving due to their specialization just can't be replaced easily (in fact I am probably the only one who could be replaced at all). This huge knowledge-base that is these people is the soul of the company and the heart of our income. I would never dare to venture out without these guys, they are our 'secret coke formula' in essence.

The main reason I am even entertaining this is because these same people came to me and said they are ready to go as I mentioned before. As Mr. #2, I know that if they leave, that will end us as well... so it is my job to either go with them and start the entity they want and give them the raises they are due, or try to somehow talk them into staying. These are all good people, but everyone has a breaking point.

[bozzie123]

Well you have pretty much answered your own question, you dont want to be in the position where you leave it too late and someone quits and the company begins its downward spiral and you are left without a job, its possible to be ahead of the game and quit while you still are in a good position to. Have any of the others mentioned running their own business similar?

Nick

[swordspider]

Well you have pretty much answered your own question, you dont want to be in the position where you leave it too late and someone quits and the company begins its downward spiral and you are left without a job, its possible to be ahead of the game and quit while you still are in a good position to. Have any of the others mentioned running their own business similar?

Nick

Thanks Nick. Yeah I guess I have... I'm just not excited about the transition.

Some of the mid-level field guys have said they want to start their own company and a few of them have already left. I don't mean to demean people but they are not of much concern to me purely from a business standpoint because they are replaceable, so I wish them well. The 3 guys I mentioned before though are key players and they look to me to start the new entity because they understand it will cost money and require the intense back-side setup that they don't do. We're all college grads though and I have an MBA from Duke, so we're all intelligent enough to see it through the transitional period. I have the money though and they respect that. The idea is to set up an even partnership with me taking the bulk of the risk up front financially (which I am willing to do) and then they would 'claw back' their ownership as I was paid out my initial investment and interest.

[bozzie123]

Well to me it seems like you are looking for a way out and so are the others, clearly you have a lot of knowledge and expertise in the field, most successful business start with less resources than what you have now, so you are half way to success, it doesnt sound like the currently owner pays much attention to the current business, so why not begin starting up a website, building up some contacts and getting the commitment from the others to the project, then when you feel you are ready, resign along with the others, bringing his business down and leaving the current customers no choice but to come to yours.

Nick

[swordspider]

Well to me it seems like you are looking for a way out and so are the others, clearly you have a lot of knowledge and expertise in the field, most successful business start with less resources than what you have now, so you are half way to success, it doesnt sound like the currently owner pays much attention to the current business, so why not begin starting up a website, building up some contacts and getting the commitment from the others to the project, then when you feel you are ready, resign along with the others, bringing his business down and leaving the current customers no choice but to come to yours.

Nick

It is that killer instinct that I lack. I don't want to ruin the guy but he has pretty much done it to himself so I shouldn't care but for some reason I still do. It is kind of that whole captor/captive relationship mentality I guess. Regardless, I'm moving forward with it, I was already there just kind of needed 1 outside person to put me over the top as strange as that may sound. Unfortunately there is not a lot of time and I am getting a lot of pressure from the others, so I just called a meeting this weekend of all the key players and we're going to come to an agreement and act on it as soon as we all determine it makes sense, which may be next week!

Thanks a Million.