Business Parachutes

A few weeks ago we looked at why running your own business is a lot like flying a Boeing. After a great deal of thinking these past few weeks, and playing with checklists, there is at least one major difference. Most Boeing pilots aren't usually allowed to carry parachutes on board. But we are allowed to wear business parachutes!

The term golden parachute is usually applied when a professional manager/director in a large firm leaves with a huge exit settlement - and that's widely regarded as a wise strategy for the departing employee. Yet for some reason we see it as more noble when our aspirant business pilot goes down in flames with his business and takes his innocent family with him. Why is that? Why is it less noble when our hero carries a SME parachute that allows him to bail out as the flaming business aircraft plummets helplessly earthward?

If the point of going into business for yourself is to make money, then how does it make sense that each day we risk everything we have ever worked for on every decision we make? If you feel that making money is not the point of your business, then ask yourself how long it will last without it making money. For most of us the goal of our business efforts is to make enough money to live well now [income] and then to make enough money to retire comfortably. But what happens when the longer term plan fails? Why on earth throw everything away - into the hands of folk whose only job is to sell it as quickly as they can for as little as they can? [The polite term for these folk is liquidators!]

Most of the folk who disparage business owners wearing parachutes have never been in a business that is plunging towards the ground at a terrifying pace. Unless you have personally experienced the terror of your own business closure you cannot understand how helpless, frustrated, scared, overwhelmed and insecure you feel. Packing a parachute for such times seems positively wise. The only problem is that you have to pack the parachute before the business plane hits the ground.

For what it's worth, in the bigger firms we all deal with all of the employees have parachutes. They [and their families] will never be held personally accountable for any challenges their business faces. They simply drift onwards to another job. About the only time they get hurt is when they get caught red handed with their pants down with a finger in the cash register - and even then they probably won't get prosecuted! Yet we feel the need to risk everything we own - every day. Indeed, we're even bludgeoned into doing it by these same employees in bigger firms who insist that we sign sureties because if we won't stand behind our firms why should their firm! How fair is that?

OK, so what does a business parachute look like, you're asking. It's a legal document about 20 pages long that is registered at the High Court and allows you to protect all the stuff that is important to you. This includes your home, your policies and investments, your furniture, your sons Playstation II, and anything else you want to protect from burning. About the only things that this parachute can't carry are your gun, your CC, and your overseas investments! So why don't we all pack a parachute?

I admire deeply any person with the courage to take on the world and attempt to go it alone. And I hurt with anyone who faces the challenges of that first major cash crisis. But if we get back to the basics then it gets a lot easier. Your [and my] job is to prosper in our own business and in so doing to prosper our families. About the best way to do that is to take a step back and reconsider some of the things we're doing, and why we're doing them. Good luck.

In closing, another word for a business parachute is a trust. And it really can be as simple as this article describes. How can any of us protect our families if we don't have a way out when the engines on our business plane stutter?