When Business Owners Burn Out
Introduction:
This week, Shawn Busse and Jay Goltz discuss a recent Business Journal report that a lot of business owners are feeling burned out. Why is that, and what can owners do to avoid it? And have either Shawn or Jay been there? Plus: Shawn brings us up to date on the leadership transition he’s initiated, and—believe it or not—Jay has had another revelation about ESOPs. Also, do business owners need better regulation or no regulation? And which regulations are annoying Shawn and Jay the most right now? For Shawn, it’s the nightmare of having employees in multiple states and having to figure out and comply with the various rules of each of those states.
— Loren Feldman
Show Notes:
You can learn more about Shawn Busse’s September event Catalyst.
Here’s the Business Journal article about business owner burnout.
Here’s the podcast episode where Phil Hayes offers a fresh perspective on what it takes to do an ESOP.
Here’s the conversation where Jim Kalb talked about his own ESOP.
Here’s the most recent Dashboard conversation where I talk about regulation with Gene Marks.
Guests:
Jay Goltz is CEO of The Goltz Group.
Shawn Busse is CEO of Kinesis.
Producer:
Jess Thoubboron is founder of Blank Word.
Full Episode Transcript:
Loren Feldman:
Welcome, Shawn and Jay. It’s great to have you here. I want to start today with a topic that’s been in the news a good bit of late, and that’s burnout and how to deal with it. In a survey conducted by Walmart, 70 percent of business owners said they feel burned out at least once a month. Of course, the survey did not disclose how many of those owners attributed those feelings of burnout to having to compete with or sell to Walmart. It is an interesting starting point for our conversation. Have either of you felt burned out as business owners?
Jay Goltz:
I have to tell you, after reading it, the answers are right there. I think it’s the wrong question. I don’t think it’s: How do you deal with the burnout? It’s: How do you avoid the burnout? All of the core problems that are causing the burnout, they’re not addressing, and they think it’s inflation.
They always think it’s something else that’s out of their control. It’s inflation! It’s the labor shortage! That certainly hasn’t made it easier, but the one guy says he’s looking to clone himself. Well, there’s a problem. Um, no, you don’t have to clone yourself. You have to find someone who’s competent to do one of the jobs that you do. If you clone yourself, that would be an entrepreneur. They don’t need you.
So it always goes back to the same basic things: hiring, delegating, pricing things properly, so you can afford to pay good people. And if you read all of these things, these are all the symptoms of not doing those things.
Loren Feldman:
But Jay, it took you a long time to get to that point.
Jay Goltz:
Yes, absolutely.
Loren Feldman:
In the past, did you feel burned out as you were finding your way?
Jay Goltz:
I don’t know that burned out is the phrase. Certainly, stressed out. I had 15 years of constant stress, because I didn’t know what I was doing. I had no mentor. I never had a boss.
Loren Feldman:
I think there’s a difference between stressed out and burned out. I think everybody feels stressed from time to time. Burned out is like, “I can’t keep going,” I think.
Jay Goltz:
No, never had it. I always compare it to a sump pump. It goes up, it goes up, and then boom, the thing clicks on, and it just clears the deck. And then in the morning, I feel better. I’ve always been able to reset the next morning and dig in again. Maybe because I’m stupid, and I’m stubborn. I just have always had the resolve to just dig in.
I’ve never said to myself, “Oh, I can’t deal with this.” No, never even crossed my mind. That’s one of my few core competencies, I think. I’m stubborn and have resolve. So no, I can’t say I’ve had quote-unquote burnout to where I actually thought, “I can’t do this anymore.”
Loren Feldman:
How about you, Shawn?
Shawn Busse:
You know, I had a conversation with a friend of mine the other day who I’ve known for a really long time. And we kind of started our businesses around the same time and sort of went through a very similar trajectory of discovery and learning and growth. He’s on his way out. He’s gonna turn over the CEO role, I think, in January of next year. And he said to me, “I just don’t have another turnaround in me.” And I’ve heard that a lot, actually.
I read this article, and I was like, “You know, I’ve had that feeling too.” And I think that we’ve all gone through periods in our business where we’ve had just really catastrophic events happen. You know, a key customer leaves, or several customers leave all at once, or several employees leave all at once. And I think the frequency of those events has increased a lot in the last, say, five or 10 years. And I think that’s what I read in that survey. You know, it was like, “Okay, the pandemic: All right, we’re gonna survive that. And then it’s inflation, and then it’s massive turnover, and just on and on and on, supply chain on and on and on.” And I do hear that a lot from a lot of owners.
Jay Goltz:
I completely read that thing differently. First of all, you said catastrophic. Losing some key people, that’s not—catastrophic is finding out you’re sick and you’re gonna die. I don’t know, it’s difficult. Okay, fair enough. But when I read this, this is what I see.
Here’s the big line in there: “55 percent of small business owners surveyed identify ‘inflation’ and ‘rising costs’ as the biggest barriers to growing their business”—I laughed out loud when I read this part—“followed by ‘lack of customers’ and ‘finding and retaining good employees.’” Seriously?! If I just had more business…
I mean, at some point, you need to find out how you get more business. And these are the same people who don’t market, who don’t advertise, who just keep doing the same thing over and over and over again. Of course, everybody would be better off with more business. But is that a new thing? Is that something that just happened?
Loren Feldman:
Jay, why are you assuming they don’t market and don’t advertise?
Jay Goltz:
Because I know many of them. And I’ve heard the story from a hundred people, and when you ask the question—I have never had one person complaining about finding people, when I say to them, “Wait, wait. Stop for a second. Let me ask you a question. Did you write a really great ad and put it in a bunch of different places?” And the answer is, “No.” They complain about it. But I’m not saying it’s not more difficult. Trust me. It’s more difficult to hire. I’m not arguing with that. But it’s certainly not impossible.
I put an ad out for a graphic designer. I got 110 resumes. Some of them you say to yourself, “Why did you apply for this? You’re a truck driver.” Okay, but went through 110, identified seven good candidates. We called seven of them. Two called back. I have no explanation as to what happened to the other five.
So it’s gotten more difficult. But I don’t think this is all outside factors that are wearing people down. I believe, from talking to hundreds of entrepreneurs, they never figured out how to hire people—good people. They never found out how to price properly. It’s basic stuff. And I contend that if you work on the basic stuff in your business, it will get easier.
Shawn Busse:
I don’t know, man. I mean, I appreciate you’ve been at this longer than me. I mean, maybe you’ve got another decade or two on me. But I’ve been doing it 20 years—20-plus. And I just gotta say, the last five to 10 have been radically different from the prior 10 to 15. And what I mean by that is that the frequency of change and externalities has increased tenfold.
Jay Goltz:
Is it really tenfold? I mean, it’s gotten worse in some ways, but is it really tenfold?
Shawn Busse:
I’m not saying worse. I’m just saying change and volatility. So I’m not saying it’s gotten harder, or that the situation’s gotten worse. I’m saying that, when I first got into business, I was told things like, “Shawn, you really need to have a 10-year plan.” And like, I look at that idea today, and I’m like, “You’re frickin foolish.”
Jay Goltz:
Well, that always was foolish. You can’t forecast 10 years.
Shawn Busse:
It was always foolish, but where did that mindset come from? That mindset came from an era of a much, much slower change of pace. And I contend that we’re in an era of greater and greater volatility and change. And I think that humans really struggle with change. And that’s what’s in this survey. That, to me, is what I read.
Jay Goltz:
Well, there’s certainly part of that. I’m not arguing with that. But I would ask you, the person who told you you’ve got to forecast, was that actually a small business owner? Or was that some academic or someone from big business? Because you can’t forecast 10 years on a small business. I don’t know that that has changed.
Shawn Busse:
I agree. That was probably foolish for small businesses from the very beginning. Yes, it’s academic literature that’s informed by corporate America and Wall Street, and small businesses inherit those ideas. But I think my point being here is that, while that was probably never a great idea for small businesses, the pace of change has radically changed. And I think that this type of article is a reflection of that.
I mean, just take, for example, the idea of how hiring used to work. Like, I remember when I first went after jobs, it was, “Shawn, you are lucky to have a job here.” Now, the mindset is massively different. Employees are like, “What’s in it for me? What are you going to do for me?” And I don’t know that they’re wrong to say that, but that’s a paradigm shift.
Jay Goltz:
That’s changed. There’s no doubt about it. But in the same token, though, I’ve hired some lovely, wonderful young people who come to work every day and work hard. So it’s not a 100 percent change. It’s gotten harder. I’m not arguing with that. It’s definitely gotten harder. And a lot of things are driven by Baby Boomers.
The Baby Boomers are now old and retiring, and there are less people to hire, possibly. There have been some structural changes. And certainly, I don’t know that any of us have recovered from 2008. I mean, I know my business never really did, so I’m not saying it’s not difficult out there. I’m just suggesting there are still some core basic things that people still aren’t doing that would make their life easier.
Loren Feldman:
I’m sure that’s true, Jay, but Shawn started with the example of talking to another owner who said he’s not sure he’s got another turnaround in him. I don’t know who Shawn’s talking about, so I don’t know if that was a well-run business that just has hit difficult times.
Jay Goltz:
No, no, I’m not talking about that guy. I’m talking about the article. I’m just reading the article.
Loren Feldman:
Well, I don’t want to just debate the merits of the article.
Jay Goltz:
Okay. Well, that is what I’m talking about, though. I’m just talking about the fact that somebody would go, “Well, if I just had more customers.” Oh, for God’s sake. That’s like, “Oh, I would go to the Olympics if I could just run faster.” I mean, of course we could all use more customers. What are you doing about it, is the question. And when you ask people—and I’ve done it 100 times—they never tell you the right answer.
I deal with vendors all day long. And I just scratch my head at the fact that there’s still people driving—here’s a perfect simple example: You call someone out to your house, whether it’s a plumber, electrician, whatever, and half of them just have blank trucks. You know, you see these beautiful trucks with the name on there so all your neighbors can see who’s doing the work. And they don’t want to do it. One guy once told me, “Well, I don’t want to mark the trucks, because then people call and complain about my guys driving,” which is pretty sad.
Shawn Busse:
If I hear you correctly, Jay, what I hear you saying is that you have to nail the fundamentals.
Jay Goltz:
Yes.
Shawn Busse:
And a lot of folks are not nailing the fundamentals.
Jay Goltz:
Yes. And that would take some of the pressure off.
Shawn Busse:
I agree. I 100 percent agree with that. I think these two ideas support one another. So for many years, I think owners could be totally lazy and shitty at hiring, and their businesses did okay. And I think what’s happened is the landscape has changed. And you can no longer be lazy and shitty at hiring.
Jay Goltz:
I don’t disagree with that. You could just show up.
Shawn Busse:
Yeah, right. And so today, the change that’s happened that has made this a reality is the internet and transparency of work.
Jay Goltz:
Yes, absolutely. I’m 100 percent with you. Yes.
Shawn Busse:
You used to not understand, “Well, what do other people make? What are working conditions like? Is this place a good place to work?” You didn’t know as a candidate. You were just grateful to have a job, and today, the power has changed dramatically.
And so, nailing the fundamentals back then meant you placed an ad for a job. Today, nailing the fundamentals means you need to have an employer brand. You need to have clear communication in the hiring process. You need to articulate your values and your mission and your purpose. You need to actually coach and elevate team members so they grow in the role. You need to get rid of toxic employees fast. Like, those things used to not even be part of the playbook. And today—
Jay Goltz:
I don’t disagree with you. You’re right. When somebody used to not take care of a customer, maybe they told a few customers. Now that goes on the internet, and everybody sees it. But here’s where I laughed out loud. I just want you to think about the people who wrote the survey. They said, “But just 6 percent of HR leaders cited employee burnout as a concern.”
They’re just not concerned about it. What a surprise: In big corporate America, the HR people aren’t concerned about their people burning out. Are they concerned about anything, other than their own jobs? I don’t know. I’ve never worked in big corporate America. I mean, that’s funny, that only 6 percent said burnout is a concern. That doesn’t mean that they don’t know there’s a lot of burnout. They’re just not concerned about it. Are you concerned about it? I’m concerned about it.
Shawn Busse:
Yeah, that was the last line in the article, where it essentially cited that 70 percent of employees are burned out. I mean, two-thirds of the workforce is saying they’re burned out. And then only 6 percent of HR leaders are actually saying that it’s something that they worry about. And I think you’re right. I think they’re surveying HR leaders within corporate America. I don’t think they’re surveying small business owners.
Jay Goltz:
That’s what’s funny about it. They’re just not concerned about it. Because the fact is, people don’t understand—a lot of people. Unless you’ve got 100 employees, you probably don’t have an HR manager. That’s kind of the magic number. I didn’t. So whenever you see an HR person speaking, it’s almost always a larger company. It would have to be, because a company with 15 employees doesn’t have an HR manager.
Shawn Busse:
Yeah, that’s actually a good point, in terms of data gathering.
Loren Feldman:
Shawn, when you were talking about the other owner that you’d spoken with, you expressed some sympathy and indicated that you’d had that same sense from time to time—or maybe once. I’m not sure. I don’t wanna put words in your mouth. Can you tell us what you were referring to?
Shawn Busse:
Yeah, I mean, I tried to list some examples of what I call turnaround moments. But I think the ones that are, in my mind, really significant in my career, were at the beginning of my business, which was the tech meltdown in 2000, the bombing of the World Trade Center, the Great Recession of 2008, the beginning of the pandemic. Moments that were in many ways existential threats and crises to the business, and those are externalities.
And then there are also business level crises. Like, “Oh my gosh, something changed.” A good example would be somebody who really relies on Google AdWords for all of their business, and then Google changes an algorithm. And then suddenly, the thing they used to get their business no longer works. That’s an existential crisis. Or Facebook.
I mean, you have some guests on here who have used Facebook to great effect, and then it no longer works for them. And are they able to reinvent the business? Are they able to actually do a massive change to the business to save it, to literally save it? And those are hard moves. Those are really hard moves, and I’ve done a number of them in my career.
Jay Goltz:
And you know what? I 100 percent agree with you, and you are in a far more volatile business than I am. I certainly have had major drops, like in 2008. But in your business, when business slows down, the first thing they’re gonna cut is maybe people who do what you do. So I certainly understand that you’re more vulnerable to the economy, probably, than I am, to some degree.
But it still gets back to—there’s always a part of this of: All we can do is what we can do. And there are always things you can do in your business. If you’re having a hard time hiring, tune up your hiring process. But I think if you were to follow up with many of these people, they haven’t done anything. They just say, “I can’t find people.” Really? I’m finding people. It’s harder, no question about it.
Shawn Busse:
Well, you also have something that a lot of folks don’t have, Jay, which is: You have size, and size buys you cushion.
Jay Goltz:
Only to a degree. I still have tremendous overhead because of that size. So it’s very easy for me to go from making money to losing money. All I’ve got to do is drop 5-10 percent of sales, and all of a sudden, I go from making money to losing money.
I just learned, over the years, all I can do is all I can do. And I’m always just trying to figure, “Okay, what can I do about this?” So I’m trying to stay ahead of it. And we’re writing better ads, which we’re playing around with where to advertise. I really have no explanation as to why the five people didn’t call back. It makes no sense to me. And I still haven’t hired anyone. This has been going on for two months. It’s just remarkable.
Shawn Busse:
I mean, I think this is a good example of we’re kind of both right here. I tried for a really long time to kind of get into the construction industry as a client base. We have expertise in that arena. I love buildings. I wanted to help this group. I would go to their events, and I would be a speaker, and folks would be super motivated.
They’d be like, “Wow, that’s really great. You really showed us how it can make a big difference to create a culture that’s strong and a hiring process. That’s great.” And then some folks would say, “Hey, yeah, give me a call. I’d love to talk.” And I would call them, and they’d never call me back. They would identify that it’s an issue. They’d complain about it. But they actually wouldn’t change.
Jay Goltz:
Well, I have a phrase for that. I call it trade-show talk. You’re there. You’re hyped up. No one’s lying. They really mean it. They’re all enthusiastic. And they get back to work. “Oh, yeah, that guy. I don’t want to do that.” The fact of the matter is, people don’t do what they need to do.
I remember one guy in particular. I was doing a business speech, and I said, “You know what? One of our jobs as the boss is, there are people who can’t do the job. You’ve tried, you’ve coached them, you’ve done everything you can. Whether they’re unable, whether they’re unwilling, or they’re just unexplainable, your job is to fire them.”
And this guy looks at me. He goes, “Yeah, I’ve got this woman who’s worked with me for years. I promoted her to be the office manager. She’s doing a terrible job. She’s killing me.” So coincidentally, I run into him, I don’t know, six months or a year later at another conference: “How did it go with that woman?” He looks down to his shoes: “Yeah, I gotta do something about that.” That’s what my experience has been talking to people. And being in business groups, same thing. Like, “Yeah, yeah, yeah.” But do they actually go ahead and take action?
I’m not saying everything’s whining. It is difficult out there. So it’s absolutely more difficult. But there are some things we can do every single day. And we need to be doing that, because we are flying the plane. We’re not the passengers. We’re flying the plane. Make some adjustments. Figure out what you’re bad at. I’ve certainly got some issues I’m working on. You know, we’ve talked about my inventory problem. I think it’ll be okay by the end of the year, but I’ve still got issues I’m dealing with. But I’ve just learned to deal with it.
Shawn Busse:
Okay, so two things that I think might be a little bit helpful in this situation. So one revelation I had many years ago—and this is from the world of psychology—is that if you remove the stressor, the stressor still remains for a while. And I think that that survey is, to some degree, a lagging indicator. And I think folks are looking to point at something. But I think a lot of owners were just worn out and beaten down by the pandemic. And today, they’re still exhausted, even though the pandemic stressor has been removed. And so then they say, “Oh, yeah, it must be inflation or supply chain,” you know? They’re trying to point to something. But my theory of the case is that it’s the exhaustion from the pandemic.
And then the second thing—this is hugely helpful for me, in terms of employees and burnout—is that employees have three things going on in their life. They have where they live—their community; their home life—their partnership, their spouse, boyfriend, girlfriend, partner, whatever; and their job. And when something is not working or they’re under stress, generally humans seek to change something. And a lot of times, they can’t change the first two things. They can’t change their spouse. They can’t change where they live. And so they’ll change their job, even if the job isn’t the source of the stress. They’ll start to look at it and go, “I’m unhappy. It must be the job.”
I’ve seen people do this so many times. They’ll be like, “It must be the job.” They go take a new job, and they’re still unhappy. And I think that the last few years have been really hard on everybody and things outside of work. And so, as a result, I think you’ve got a lot of things like the Great Resignation, you get employee burnout. That isn’t necessarily related to work, but it’s the one thing that they can change.
Jay Goltz:
There’s no question that everything you said is true. It has gotten more difficult. And I certainly have had examples of that. My only point is, it’s half that and it’s half fundamentals that we all need to be working on. And I would argue, even without the pandemic, have you never talked to a business owner who goes, “Oh, you can’t find people that want to work these days”? Have you not heard that?
Shawn Busse:
Yeah, sure.
Jay Goltz:
I mean, you know, really? You know what I’ve learned over the years? The difference between me and many people, especially in the picture frame business, is I spent all of my time trying to figure out, “What am I doing wrong? And what do I need to fix?” And they don’t spend any time on that. They’ve just convinced themselves they’re doing everything right. And I don’t know how you improve if you don’t continually be your own worst critic.
Loren Feldman:
Shawn, you talk to business owners all the time. Do they go through the process Jay just described by asking, “What am I doing wrong? Why is this not working?”
Shawn Busse:
Yeah, I think the folks who become our clients are really open like that and are curious. I would say they start from a position of curiosity: “What can I do better? What can change?” I mean, I had a client once where he bought the business from the founder, and their workers comp insurance—they were about to become disqualified for workers comp—they had so many workplace incidents.
And the prior owners just looked at that and was like, “Well, you know, people just need to be more safe.” And then the new owners were like, “Actually,”—to Jay’s point—“we could implement some processes that help take this people-just-need-to-be-more-safe mindset out of it. And actually, the place becomes more safe.” They turned that thing around like crazy. They’re saving 100 grand a year on workers comp policy because they said, “What do we need to change? What status quo is failing us?” And I think owners who do that, they’re the winners. And those are the ones I like to work with.
Jay Goltz:
Keep in mind, Loren, you asked a trick question. You said “of your clients.” His clients are the ones that figured out, “We need to improve.” It’s the ones that didn’t hire him that are the issue. Yesterday, I went to a work site for this big building being built downtown that my son’s involved in, and it’s their opening of something. And it’s a raw worksite. You know, the rickety stairs, the construction elevator, everything.
And my son’s assistant came with, and there’s a guy following. “I’m in charge of safety,” he goes. The woman’s wearing flip flops. [Laughter] I want you to imagine walking through a construction site with rickety stairs. And I said to her, “This guy’s in charge of safety. He should have never allowed this.” And she didn’t disagree. I mean, they should have never let her walk around with flip flops. And he’s in charge of safety. So like, someone’s probably going to get hurt there eventually. And it’s not going to be an accident. It’s going to be someone not doing their job.
Loren Feldman:
All right, next topic. Jay, a couple of weeks ago, I published a one-on-one podcast episode with you in which I said you’d concluded that an ESOP probably wasn’t for you. You corrected me and said an ESOP absolutely wasn’t for you. Is that your final answer?
Jay Goltz:
Um, I listened to your podcast episode last week with you and Shawn and Phil [Hayes], the new ESOP guy—
Loren Feldman:
It’s been more than a week now.
Jay Goltz:
Okay, whenever I listened to it. And you know what, I realized I have PTSD from that seminar I went to with Shawn because I swear I—
Loren Feldman:
Not because of Shawn. [Laughter]
Jay Goltz:
No, no. Shawn and I went to this thing in Portland. I flew out there. And I don’t think I could have choreographed a worse day of explaining ESOPs, from the fact that there were no seats left in the room, and Shawn had to sit in the back. And then you find out that the people in the best seats are the vendors. To the slide show you can’t read. There was supposed to be a half an hour roundtable. They skipped it. So it was a really horrible presentation. Turned me off. After listening to Phil, I realized, “Okay, I went to the wrong seminar.”
And there’s another part, this is my real revelation: When you’re 45, and you think about an ESOP, that’s an option. When you’re 67, it’s a solution. Like, I need to do something. And I’m opening up my mind. I’m going to continue to look into it. I’m going to another seminar at a different place with a different group of people. And I am going to continue to look into it, because even though it might be quote-unquote a pain at times—there’s a lot of paperwork, and there’s trustees, and all that—it just might be worth it at the end of the day. It just might be worth it. So, yes, I’m taking back the: “it’s absolutely not for me.” It might be for me. I’m gonna work on it.
Loren Feldman:
Shawn, it was your idea that we talk to Phil Hayes for that podcast episode. You had met him at the event that Jay described—and I got a lot of really positive feedback. So thank you for suggesting that.
Shawn Busse:
Yeah, that was a really great conversation. I didn’t know exactly what to expect, but like a lot of things I do in life, I had a hunch. I was like: I think this guy is the real deal and what maybe owner-operators are looking for. And I really appreciated his candor about whether you should be an ESOP or not. I think he’s kind of like, “You know, it’s not for everybody, but for some, it’s great. And you don’t have to make it super crazy.”
Jim Kalb, who’s part of the 21 Hats community, he’s ESOPed his company. He’s talked about his process, and I think he’s done it in a way that didn’t involve the industrial complex of ESOPs. So yeah, I think it was encouraging because it’s showing that there are other paths to doing it that don’t involve Chase Bank. I mean, it was crazy. It was a crazy event.
Jay Goltz:
And I have to say, you know, we left after the first day. It was a two-day event. Shawn, did anyone call you to follow up?
Shawn Busse:
No, they email-automated me, of course.
Jay Goltz:
I have to tell you, if I put on a seminar and I had someone fly across the country and they left in the middle of it, I’d be pretty concerned. And I’d follow up and go, “Hey, what did we do?” I don’t get the feeling like anyone really cares. It’s like, they keep doing their show, they keep getting some people in it. I’m not exaggerating when I tell you, I don’t think they could have done a worse job than what they did.
Loren Feldman:
I have to say, since we’ve been having these conversations, I’m starting to hear more and more people use the term “the ESOP industrial complex.” And if I accomplish nothing else, besides coining that phrase, I think I will have done something good.
Jay Goltz:
Absolutely, it also doesn’t mean that everyone involved in the industrial complex is bad. I did talk to another ESOP advisor. All they do is ESOPs. They’re not an investment banker. And it was a very encouraging conversation. And I appreciated that Phil was honest on there.
I’ve watched three seminars now. I have never seen one person who said—no, I take it back. There was one guy that said he sold to an ESOP. He did an ESOP, and it worked out well. There was one, but the other two of them, you’d think they’d put someone on there to give the owners’ perspective.
Loren Feldman:
Those people do exist. I’ve certainly spoken to them.
Jay Goltz:
They do exist. Of course they do. And you know, I asked the question there, and the guy gave an honest answer. I said to him, “Could you have gotten more money if you would have just sold to private equity?” And he’s in an industry where there’s a huge conglomerate that is buying up everybody for huge multiples. And he goes, “Oh, I absolutely could have gotten more money. But I got enough.” And you know what, I appreciated that answer, because it was honest. And I think his business was big enough—”enough,” in his case, was a lot of money. It wasn’t like he got 2 million instead of 4 million. So that was honesty.
Loren Feldman:
Jay, I have two questions for you. You say that you’re thinking about ESOPs again. Your mind is open. There were a couple of issues that came up that you thought were kind of deal breakers. One was, you didn’t want to hang an ESOP on your kids if they stayed involved in the business. How are you thinking about that now?
Jay Goltz:
I have two answers to that. One is, if I continue working for 15 years—which, who knows?—I’d be 82. I think that might be the case. My kids are going to be 53 and 48. I don’t know that they’re gonna want to go ahead and just take it over and start running it. So there’s that. And two, I think this would make their lives easier for all the reasons ESOPs are promoted. People are more invested, they hang around.
So yeah, I’ve changed my head on that. That would be a good thing. There’s a lot of flexibility with an ESOP. Like, if you sell your business, boom, done, you’re out. Here, I could retire in a year. I could retire in two years, five years. It’s flexible. You’re still running it, but there’s an infrastructure in place that’s in place—either by choice, or you drop dead, whatever the reason is—to continue on.
So I recognize it might just be a good infrastructure to put together. Because if I don’t do it, I’m left with the same problem of: So then what do my kids do when they’ve decided they’ve had enough? Now what? We’re going back to square one. So I’m very seriously looking into it. It’s going to take me a couple years to actually get it to work.
Loren Feldman:
Well, let me ask you my second question, then. You have said in the past that you don’t really feel the need to grow your business. You’re not looking at opening new locations or anything like that. You’ve done enough of that. Can you run an ESOP without trying to grow? Or do you need that growth to pay back the loan or…?
Jay Goltz:
I’m not taking a loan out. A lot of the problems you hear about are when they take out the bank loan. Okay, I don’t need to take the cash out, so I will finance it myself.
Loren Feldman:
Okay, but then they have to pay you.
Jay Goltz:
Right. I believe, though, it’s flexible. Okay, so the answer is, when I say I don’t want to grow, if I grow it six percent a year, that’s perfectly fine, just organic growth from my existing locations. Now, are my employees going to retire with millions of dollars? No, it’s not going to be one of those cases where the business grew 10 percent a year for 10 years.
But again, it also solves my problem, which I accept: I’d like my employees to have more retirement savings. So it takes care of that, which is part of why I turned off it. I said this to you. I realized I can do a tax-deductible way. All I have to do is say, “Okay, everyone. I’m going to give you 2 percent of your salary into the 401(k) plan.” It’s a deduction to the company. They get it in the 401(k). So that took care of that problem. So that was one solution.
This solution also takes care of that problem, but it has the extra benefit of the whole engagement piece, the whole PR piece, which doesn’t have to be dramatic. If sales went up 2 percent, that’s a lot. That would cover the expenses, if your engagement got just a little bit better.
I’m not suggesting any of this is going to be, all of a sudden the company’s going to dramatically change. But just a little change should pay for itself. What I have to figure out is, what are the complications of this? And what are the downsides? I haven’t yet had enough experience talking to the consultants to find out what the story is. And that’s why I’m telling you. I’m not sure I’m doing it. But at the moment, I’m certainly looking into it, because it’s got lots of potential upsides.
Loren Feldman:
Shawn, you’ve talked here a little bit about being in the process of a leader transition. Can you give us an update on how that’s going?
Shawn Busse:
Yeah, Jay is gonna come run Kinesis. [Laughter]
Jay Goltz:
Oh, that was supposed to be a secret for God’s sake. All right.
Shawn Busse:
Yeah, I promoted Anya Taylor to the role of president. She has been with us for… gosh, four or five years now. Really wonderful. She started out on the operations side, moved into a people leadership role. If you do StrengthsFinder, she’s a galvanizer. She’s really good at coalescing people around things. It was just really well-received amongst the team. They’re excited about it. She’s excited about it. She’s really taken a lot of leadership.
Jay Goltz:
Wait, so what’s her new title?
Shawn Busse:
She’s president. So, I’m still CEO, and essentially doing that two-year transition of showing her how to do all the stuff that I do and catching her up to speed on that.
Loren Feldman:
With the goal of your role becoming… what?
Shawn Busse:
Chair of the board, moving to more of a board position eventually.
Jay Goltz:
Do you have a board?
Shawn Busse:
It’d be just me. Yeah.
Loren Feldman:
Then you’d definitely be chairman.
Shawn Busse:
Yeah. For sure.
Jay Goltz:
Wait. How old are you?
Shawn Busse:
I’m 52.
Jay Goltz:
So at 54, you become the chairman of the board. Wow.
Shawn Busse:8
That’s the goal. I mean, we’re still digging out from the pandemic. We had a pretty predictable machine going into it, and it really screwed all that up. And so, now we’re rebuilding and retooling. And so, yeah, there’s still a lot of work to do.
Loren Feldman:
You’ve talked about that a little bit, Shawn. You’ve talked about the tool you were using previously was going to events and holding events. Obviously, the pandemic interrupted that, but you’re getting back to it. You have your own event coming up in September, right? Catalyst?
Shawn Busse:
Yeah, Catalyst is September 7th and 8th. It’s an event for owner-operated businesses, so a roomful of business owners, basically. And this is our second year of doing it in person and our fourth year of doing them. We did two years of virtual, and now we’re doing them in person.
Jay Goltz:
So wait, explain this to me. I’m having a hard time getting my head around this. So when you’re the chairman of the board, will you be golfing? [Laughter] What will you be doing every day? I’m trying to get a handle on this. Going for massages? And then maybe the stockbroker on Friday? And then golfing the rest of the days? What’s the story?
Shawn Busse:
I like golf as much as you do, Jay. So, no golf. Although I hear Pickleball is huge, so I might pick that up. I think the job of a board chair, in that type of position, is to just make sure that the ship is still sailing roughly in the same direction, in the right direction. You maintain commitment to the values of the vision. But ultimately, you’re letting other people have control of the rudder.
Jay Goltz:
And how many employees are there going to be at that point, do you see?
Shawn Busse:
When I leave, I think we’ll probably be 14 or 15. It was very tenable in 2019. I had the path laid out. I’d handed over a lot of jobs at Kinesis many years ago. I think, unlike a lot of owners, I never had a strong emotional attachment to being the guy in the room.
In the consulting business, oftentimes, you have to sort of be the owner and the smartest person in the room, and I don’t know that I’m really the smartest person in the room. And I never kind of needed that as part of my identity. So I built out a system where I wasn’t delivering the work. And we’ve been doing that for, I don’t know, over 10 years now.
Jay Goltz:
I call that going from a profession to a business. You’re no longer=, you know, the doctor. You’re the person who hired the other doctors. So you made the transition. Well, that sounds good. Okay, you’re going to come to Chicago and hang out some? You’re going to what? Can I count on that? Can I write that down?
Shawn Busse:
Yeah. Jay, I sent you an invite to Catalyst. I’m just waiting for you to show up in Portland.
Loren Feldman:
Shawn, are there still slots available? And if anybody’s listening who’s interested, who should come?
Shawn Busse:
Yes. The people who should come are business owners who have employees. A lot of the work we do at the event is collaboration, and kind of shared workshops. And a lot of it’s around how to elevate teams, how to create a sense of shared culture, momentum. So businesses that have employees, businesses where the owner is the operator. Not anything private equity. They would never come to this anyway. Nobody owned by private equity would ever come to Catalyst.
Jay Goltz:
Okay, so who shouldn’t come to this?
Shawn Busse:
Private equity. [Laughter] I think for solopreneurs, it’s a big investment, in terms of the ticket price, so it’s probably not as much for them as it would be for somebody who’s moved to a place of having employees. The theme of the conference is “Bold Type.” So it’s really about the idea of challenging the status quo, to our conversation earlier about being curious about what needs to change and what can be done differently. So yeah, you’re gonna find a lot of owners who think differently and think about big ideas, as opposed to best practices and kind of cranking the wheel in the same way every day.
Loren Feldman:
All right, we have just enough time for one more topic. I’ve had some conversations with Gene Marks of late about regulation. Gene’s pretty anti-regulation, as you know, if you’ve listened to any of our Monday Dashboard episodes. He’s told me that he just doesn’t like being told what to do by the government, that he’s insulted when he’s told to not do something he probably wouldn’t do anyway, and that neither he nor his clients would ever do anything that they’re not supposed to do.
Shawn Busse:
Out of the goodness of their heart.
Loren Feldman:
I don’t want to debate Gene.
Jay Goltz:
No, I think it’s funny in itself that his clients would. Okay, does that mean nobody would do it then? I mean, really? I mean, seriously? We don’t need some laws to make sure people don’t get abused at the workplace and stuff?
Loren Feldman:
I don’t want it to debate Gene, because he’s not here to make his own case. But I did want to ask you that question. He doesn’t quite go this far, but he’s kind of making the argument that all regulation is bad or unnecessary. Do either of you agree with that?
Jay Goltz:
I don’t. I think that once in a while something comes up that is a problem. But generally speaking, this isn’t one of the things on my top 10 list of issues I’m dealing with that there’s too much regulation. It’s not in my top 10.
Shawn Busse:
Yeah, I think Gene is engaged in selection bias. You know, he probably has some good clients. And so to apply that mindset of like, “I have good people around me, ergo, we don’t need regulation,” it’s just a cognitive bias. So let’s just set that aside. But in terms of your question—I’m sorry, I had to debate Gene even though he’s not here—setting that aside, I think that there are many cases where regulation can help actually level the playing field and make it a more fair situation, even for small businesses. So I just think when we’ve had situations of no regulation, you look at things like the tech sector and what’s happened there—children working in meat factories—there are just lots of bad examples.
Loren Feldman:
We’re bringing that back, have you heard?
Shawn Busse:
Yeah! I know.
Jay Goltz:
Well, let’s start with the basic one: minimum wage. Does he not believe in the minimum wage?
Loren Feldman:
Actually, he doesn’t.
Shawn Busse:
No. He doesn’t.
Jay Goltz:
Okay, well, that kind of says it all…
Loren Feldman:
Now, he would never pay someone minimum wage, I don’t think.
Jay Goltz:
Okay. But that doesn’t mean other people won’t.
Shawn Busse:
In Oregon, and in some other states, you’re seeing a move towards pay transparency. And there are a lot of strong opinions about this. But my experience has been that we’ve been way out ahead of this for a long time. We’ve said, “Hey, we’re going to actually be transparent in how we compensate people. We’re going to put that in the job postings. We’re going to have pretty narrow ranges of what we pay people.” And honestly, it’s been fantastic. Like, it’s really helped create a more peaceful environment and a better hiring process.
Jay Goltz:
One of the places we advertise—I forget which one—they track it. And when you put the salary range in, you get a much better response. So this is a case of, believe it or not, it’s going to help your hiring process if you do that.
Shawn Busse:
I think there’s also a really important conversation around the difference between regulation and bureaucracy. And in my experience, owners are more irritated by bureaucracy than they are by regulation.
Jay Goltz:
Well, what would you call this? Because this is a real problem. In the state of Illinois, if you hire someone and they’re there 30 working days, and you end up firing them, because of whatever—they can’t do the job—you are responsible for their entire unemployment, meaning they could have worked somewhere for 20 years, but it’s all on you. And my argument is, it makes it difficult to try someone out, quote unquote.
In other states, it’s 60 days, or 90. Why can’t we go to 60 or 90 days? It’ll help the hiring process and maybe I’ll take a little more of a chance on someone who, “Okay, you’ve never done this, but we’ll be able to tell in 60 days whether you’ve adapted to it.” That’s not helping anybody.
Shawn Busse:
And you bring up a really good point, too. It’s like, okay, we’re moving to a world where there’s much more remote work. What if you have one state that’s crazy about stuff and another state that’s pretty hands-off? That creates huge problems for employers.
Jay Goltz:
Absolutely, I never even thought about that. I would have to know what the regulations in every state are.
Shawn Busse:
Right, right. It’s crazy. I mean, we have employees now in two states. And it’s a freakin’ nightmare. A total nightmare. Ugh.
Loren Feldman:
Even just two states?
Shawn Busse:
Just two states: Maine and California. Tell me how I’m supposed to navigate these waters. It is really freakin’ hard.
Jay Goltz:
Well, your payroll service should help, because I have three other states.
Loren Feldman:
What’s the issue, Shawn?
Shawn Busse:
What’s the issue? Everybody does it differently. That’s the problem. Even what Jay’s saying: is it 30 days or 60 days? Is it 90 days? How do you do workers comp insurance? How do you deal with things like people being laid off? And like, what kinds of benefits? It is bonkers.
Jay Goltz:
And some of them want you to file a tax return. They want some of your income. I mean, I’ve got a sales manager in one state. I’ve got two people who moved out of town. And then I’m in Chicago, which means someone could live in Indiana and work here. I’ve got one employee who lives in Indiana. I’ve got one employee who’s in Wisconsin. So actually, I’ve got four people who are out of state. And I don’t know that I’d call it a nightmare, but it’s a pain. And the payroll service certainly takes the edge off of it.
Shawn Busse:
It’s not a nightmare for you. This gets back to your scale size, Jay.
Jay Goltz:
Yes, you’re right.
Shawn Busse:
At a small business size, it’s a freakin’ nightmare. I’ll use one more example. There’s a river between Portland and Vancouver, Washington. I have an employee who moved over that river. And now because we don’t have an office, the state of Washington is like, “Hahaha she is ours!” And so now to deal with all this bureaucracy from the state of Washington. She’s literally like three miles from me. It’s totally insane. So this gets me to, we need better national regulation and less state regulation. But that’s not where that’s gonna go.
Loren Feldman:
My thanks to Sean Busse and Jay Goltz, and to our sponsor, the Great Game of Business, which helps businesses use an open-book management system to build healthier companies. You can learn more at Greatgame.com. Thanks, everybody!
