Earlier this week, I wrote about investing in human capital to help increase total net worth. It generated quite a bit of offline discussion with some readers. The one that stood out for me came from a rather unexpected source. Today’s post includes the highlights of that conversation, with the individual’s name disguised, per her request.
When I visited my hair salon this week, I expected the usual kind of chit-chat – exchanging a few pleasantries about how we’re finding the weather, our day’s progress, our plans for the holidays, etc. Linda, the co-owner of the salon and my stylist, was run off her feet. Usual pre-holiday rush, she said as we got started. We have not known each other long as I recently moved to this neighborhood and have only visited this salon about 3 times. But, she’s such a chatty and candid person that it seems like we’ve known each other much longer.
Theories Are Nice, But…..
So, when Linda asked me what I’d been doing with my day, I shared that I had recently started a daily blog and just finished the day’s writing. She was immediately curious: Oh, what kind of blog? What do I write about? Do I make money from it?
I played along with what I imagined to be polite interest. I explained that some consider personal human capital as the most critical and, potentially, the largest asset class of one’s total net worth – more so than investments, real property, etc. And how, as self-employed people, small business owners like her and independent professionals like me, we need to keep increasing this human capital so that it can be converted to greater financial capital over the years. I gave her some examples of what makes up human capital – our knowledge, competencies, networks, relationships, social and personality attributes, etc. Then, I watched her reflection in the mirror as she absorbed and assimilated what I’d just shared.
After a few moments, she looked at my reflection, nodded solemnly and said – “Sounds right. I always tell my daughter to work hard, always learn new things and be smarter than others to get ahead. She’s 25, has a long life ahead and who knows what the world will be like. But, me, I’m in my mid-50s. I plan to retire in 10 years and go to Florida. I don’t think this theory applies to people of all ages.”
Enquiring Minds Want to Know
My turn for curious questions. “10 years is a long time. Do you see yourself doing exactly the same thing as today for the next 10 years?”
Swiveling my chair, she smiled. “I’ve been doing it for the last 25 years. I like it. I do OK. I’ve worked hard at it. I’m good at it. Why not?”
I tried another tack. “OK. If you could go back 25 years, meaning you had 35 years to retirement, would you do anything differently?”
At this, she threw her head back and laughed. “Plenty. I would have got some better qualifications to open a more high-end salon in San Francisco or New York, probably. But, I had little kids and a no-good husband. I would not have tried a salon on my own and got a partner much sooner. Coulda, woulda, shoulda. What good does that do? Can’t go back and can’t re-do those things.”
We both pondered that for a bit. I persisted. “If you could wave a magic wand, what would you change about your business?”
She paused and looked around. In a low voice, then: “Hmm. My partner doesn’t want this, but I would bring in young, fresh talent. Liven the place up a bit to attract them. And, give them good reasons to stay – you know what I mean?”
I nodded, encouraged, and ploughed on: “Good, good. Now, if you could look into a crystal ball, what are the 1-2 key trends you see coming in the next 10 years for your industry?”
She laughed. “I don’t know where this is going but, OK. Let’s see. What do I see coming? Well, you know how they’re talking about putting those TV screens in department stores? Where people can see how they look in certain outfits without having to actually try them on? I think that would be cool for hair. Let customers “try” on different hairstyles / colors before deciding what they want. And, this one may be out there, but I think that the next generation of hairdressers will want it, so it’s bound to happen sooner or later. We have to go “green” – reduce water and chemical waste, use natural/organic stuff…. it has to happen. I’ve seen the damage that too many chemicals can do over the years. This needs to change.”
I pounced happily. “So, wait, Linda. You just mentioned 3 things that need to happen for your business to evolve over the next 10 years: young, fresh talent recruitment, technology and going green. Don’t you think those things are worth investing in so that, when you do retire, you can get a better price for your share of the business?”
First Comes Thought; Then Organization of That Thought Into Ideas and Plans
She stared at me. “Well, yeah, sure. But, I don’t know how to do any of these things. You’re not saying that I have to go back to school and learn about all this stuff, are you? That requires time and money and I cannot afford either.”
“No”, I replied, “Not formal education. But, you can certainly increase your knowledge and competencies in these areas by, maybe, getting some professional advice. At least you’ll know for sure what they might cost and if you want to do them. I’ll bet you have some clients who have expertise in these areas. We’re in Silicon Valley, after all. See if they’d be willing to consult informally for free hairstyling or something.”
“I need to convince my partner first. All these wonderful ideas of yours….” she grumbled gently.
“My ideas?” I raised my eye-brows in mock-incredulity.
We talked more details while she finished with my hair. And, while pre-booking my next visit, I warned her that I will want a progress update. She patted my back, walking me to the door, “This was a good conversation. Send me the link to your blog. Maybe I’ll make my partner read it too.”
As I stepped out into the wintry afternoon, I wondered how the salon might evolve in the next 10 years if she did make those ideas a reality. Beyond the additional financial value it would generate for her retirement, what a terrific legacy it could become for the next generation. I, for one, am rooting for her to see these ideas through.
If you’re a small business owner reading this, how would you answer the questions I posed to Linda? Where do you see opportunities to grow your business through investing in your own human capital or that of your employees?
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