The Risks of Absentee Ownership

One of the first business lessons I remember learning from my father when I was a kid was about the risks of absentee ownership. For many reasons, things just don’t seem to get done quite the same when the owner is away.
CNNMoney has the story of a reservist who was called to Iraq, and learned this lesson the hard way. He owned a limo business in New Jersey.

“The first three months I got letters saying the business was fine,” he recalls, sitting at his kitchen table one recent morning in Villas, N.J., a blue-collar coastal town dotted with crab shacks and tackle shops. “But it was actually going under.”
His cars were either running late or not running at all. Client calls went unanswered. And customers, used to a dependable service, started to leave.
When he returned home 16 months later, his company had lost 75% of its business to competitors, and Hinker, a 35-year-old father of one, was $25,000 in personal debt. To pay the bills, he sold four company vehicles and picked up a graveyard shift guarding prisoners at the local jail.

This is also one of the risks that entrepreneurs can face when they expand geographically. It becomes harder to keep on top of the details that only the owner seems to care about. As our business expanded across North Carolina, I spent a good deal of my time on the road visiting each of our locations. It was important not only to keep on top of the details, but I discovered that these visits were even more important to keep our vision clearly communicated to all of our employees. These visits became a blend of accountability and motivation.
I was talking to Richard Schulze, founder of Best Buy, several years ago and was somewhat surprised to hear him say that he still tried to visit everyone of the 400+ Best Buy stores at least once every year. It seemed that even with the growth of his company, he still believed in the importance of keeping on top of his operations first hand.
(Thanks to Scott Pafford for passing this story along).