In this series of posts, I’ll talk about why ‘rags to rags in 3 generations’ is so common that multiple cultures have a version of this phrase. This first entry in the series covers our first of many reasons: the emotional association with business and money.
The Rags (to Riches) to Rags Explained
A poor person works their butt off and starts a business, which eventually succeeds. After that, their son might manage that business and even grow it a little bit. Finally, the grandson doesn’t know how to build or manage the business, so he/she sells it. He/She spends the proceeds on various projects or luxuries until that grandchild is poor. A popular version of this proverb is ‘shirtsleeves to shirtsleeves in 3 generations’. However, I always thought that was stupid because everybody wears shirts with sleeves. Very rarely do millionaires run around in public wearing tank tops, unless they are part of a subculture where that’s common.
Anyone who went from rags to riches usually wants to prevent or delay this cycle a long time. This is a complicated equation that often requires multiple generations to act against their own nature. This starts with the next generation’s association with business and money.
Our Emotional Associations
Imagine you got punished every time you tried to read a book as a child. Every time, you didn’t get to choose what you read, meanwhile the texts people gave you were morally repulsive and intellectually dull. What’s worse, any time you got in trouble, reading was your punishment. They put you in a room with low status troublemakers and creeps who actually enjoyed the tripe you were forced to read. And if, God forbid, you found something you might like reading, an authority figure grabbed the book out of your hand and called you an idiot for wanting to read it.
How many books a year would you read as an adult?
You and Netflix would have a close relationship, to say the least.
Now imagine whenever you were in the same building with business owner mom or dad, they never had time for you? They were always yelling over the phone, or at employees? They shooed you away from any aspect of the work you were curious about. Or told you you were too young? Or that you should be seen and not heard? That you had to spend time in the office as a punishment? And any time you had to do work in the office, it was always make-work – chores that made you busy but never provided a sense of significance. You got less than a minimum wage employee, had no ownership, no opportunity to lead or start any project, and mom/dad shut down any ideas you had, no matter how small.
You’d run too.
These experiences create a negative association with work. Even if your child inherited your business, stepping into the office would remind them of their powerlessness. Their insignificance. That’s not the best frame of mind to run a business. Maybe they’d do things as well as they could remember – exactly the way you did them. Meanwhile, the business world changed and without your business changing with it.
The solution? Starting as early as possible (or today), change your family members’ emotional association with the business. The business should be a source of things that help them become more of what they want to be. Second, it should be a place where their ideas are heard, where they get more meaningful work than any entry level job with a stranger. Where they get projects, can ask questions, can try new things, and even be allowed to fail as part of the learning process.
The business needs to be less a statement about the kind of person you are, and more of a school to teach the next generation. It should teach them to love the very habits, work ethic, creativity, and service that will make their dream life possible. The same way a good wife supports her husband, should increasingly become the way a father treats his children in the business. Their achievements are not only your success; they can be a bigger success than anything you could have done alone.
Your Bookkeeping Strategy
As your bookkeeper, your success is my success. Let’s talk about your goals. Schedule a free short call where we can talk about where you want to go with your business. When I offload the bookkeeping, it should have you 80+ hours a year compared to doing it all yourself. Your kids should still learn how to read the reports though!