You’ve got that exactly right. I split my business into 2 entities simply to protect the intangible assets from the tangible ones. While that seems backwards (I mean, most people try to protect their tangible assets) the point is what makes my business money are the customers, the trademarks, the products and designs. I don’t NEED to make them myself. And I don’t NEED to make them in California. So I am now set up such that if I ever get fed up, I can shut down my production facility and re-open it in any of the other 47 continental states, or I could simply outsource the production to some other entity. The trademarks, customers, products and designs are still mine, and while they are not the heavy assets they also can’t be taken away, fined, shut down, inspected, audited, burned, flooded, locked out, on strike etc etc etc.
It’s like the old tycoons made their fortunes in rail, steel, oil and gas... now the tycoons make money out of electrons while the heavy equipment people are practically liabilities (like GM or the Railroads or trucking companies). They cost too much; they are too cumbersome; they are hard to liquidate; they are hard to operate; they require lots of people doing hard, sweaty, dangerous work; and when they lose they lose big, etc etc.
It is truly sad - this is why manufacturing is dead in the USA. You nailed it, and I, as a manufacturer, understand it all too well. I want to continue, but it has become markedly more difficult in recent years than 20 years ago. I can’t even begin to tell you how many different licenses, permits and fees I have to pay for every year. I need a permit for a boiler, I need permits for every one of my pieces of equipment... it would be like a shopkeeper having to have a permit for every display in his store. I have to pay for the privilege of using the equipment that makes the products that employ my employees. It’s beyond asinine.
Thank you for sharing. You can only imagine how much I can relate to your story!
In addition to laying off all staff last year, and completely changing the business model, we also divested of our several large, hard assets. In the same manner you described (i.e. new business model), we are now on a track to DOUBLE our business this year WITHOUT any staff. I will NEVER again take on the liability of staff because I am determined not to!
Like you, we have strategies in place to shift quickly from the left foot to the right foot, so to speak.
I have been saying for decades that what the gov’mint types simply don’t understand is that those of us who are entrepreneurs have in our DNA the ability to adjust to changing times. The liberals and gov’mint types (DEMS and REPUBS) make all their decisions based on the belief that nothing will change; that they can make assumptions that the future will remain like the present. They are wrong.
You are exactly correct; there is enormous value in the intangibles.
Years ago I attended a weekend intensive class for CEO’s, taught by Peter Drucker. I’ll never forget what he said:
“It isn’t manufacturing jobs or products that are our most valuable export. The most valuable export of the U.S. can be folded into a small piece of paper and travel in the breast pocket of a coat. It’s our ingenuity and our management skills. Those are the most valuable exports that the U.S. has and the ‘product’ in which the rest of the world is very much interested.”
He was so right.