If you put a frog into water, it will immediately jump straight out, burnt a little but it will live. But if you put a frog into tepid water and slowly heat it until it boils, it will stay there and die. So it is in business. Business owners are often too busy working in the business to regularly test the water. They do not identify potentially terminal business problems until it’s too late.
Yet it’s pretty easy to test the water. Taking a little time out of the business to think about the long term, to think about your options, could buy you the time you need to turn an ailing business around, saving you time, money, reputation and self-pride. Day in, day out I see business owners who fail to do this and simply drive the business to the wall, losing a lot, sometimes everything. Don’t do the same as the rest, do like I did and buy yourself a hammock – it’s one of the best tools in my business!
If any of the following apply to you, you need to take some time out, consult with your trusted advisers – you are far too close to your own business to see all the issues, all your options or all your opportunities. I know I am too close to my own business, you will be no different. You will get much from your discussions with your adviser, whether they be your accountant, lawyer, IFA, business consultant or peer.
- ‘I am the business’ – The boss who micromanages stifles all imagination and initiative, such that real growth and business improvement are impossible. Eventually your staff will rebel, voting with their feet, leaving you to either downsize or fail.
- ‘I am immortal’ – No you are not, nor is your business! Without a succession plan, the business is only a heartbeat away from financial chaos. Business owners who say say ‘they are winding down to retirement’ but have not brought a new owner/mover and shaker on board often fail because they have taken their eye off the ball.
- ‘I have a plan, I’m just not telling anyone’ – many small business owners merely retain their plans in their heads. They fail to communicate it to staff – staff feel uncared for, they lose faith in the owner, communication breaks down, the best staff leave. Putting a plan in writing will pick up alternatives, weaknesses, and opportunites you will not have properly thought through. To fail to plan is to plan to fail. Failing to stick to a regularly reviewed plan (that’s to say once you have produced it don’t just put it in a drawer and forget it) leads to a number of disasters, one being ………
- ‘Grow, grow and grow’ – yes, despite the recession, some businesses are growing! Businesses that expand too quickly can outrun their ability to cope with that growth – finance and production typically get out of control. And don’t forget that every business that grows needs more cash – even if the forecasts don’t show it. If your forecasts show you need more cash, then double it – life has a way of working out like that!
- ‘Am I investing enough in the future?’ – If you don’t ask yourself this question, or you have done but your answer is no, then ultimately your business will fail. Not today, not next week or next month maybe, but it will ultimately fail. And with it will go your dreams. Should you really be buying that new car to sit on your drive 90% of the time or that new production / IT system which will improve your productivity – for many small business owners the decision is often as brutal as this. Putting the right decision off once may not cause monumental issues later on, but put it off a second and third time and you are in real trouble. Cash is just one element of what is needed to build a sustainable business – what else should you be investing in? – I’d argue that you, the business owner, taking time out to learn new skills yourself, to look at things differently, is probably the best investment you can make, yet most business owners only see training as something for the staff. Why is that? Again, don’t follow the herd.
- ‘Everything’s fine, I don’t need to change anything’ – If you have an attitude that all you need to do is work harder to make the business a success, ultimately you will hit a brick wall where you cannot work any harder, and the business will fail because by that time you will be spending much of your time doing the wrong things. This one is a big one. I see this time and time again. Doing the opposite of your competitors takes a good degree of courage. Yet to be a success in business in the 2010s you need to truly ’embrace change’ rather than resist it. That’s the way it is, for everyone. If you don’t like it, then get out of business and go and work for someone else.
- ‘It’s the banks’ fault that I’m not making any money!’ – No it’s not! The banks are in business to make money for themselves, not to act as a charity for UK businesses! The problem is with you! – you failed to identify and act upon the issues that put you in the hands of the banks, that effectively relinquished effective control of your business to them. Now that you recognise this, what are you going to do about it?
- ‘I don’t know what’s happening any more’ – If you don’t and you are in charge, who does? All too often business owners fail to recognise what’s really happening. They leave the figures for someone else. They trust to luck. These should not be an option if you really want to succeed. If the business is not important to you, then adopt a happy-go-lucky attitude. If it is important to you, as I am sure it is, then learn to understand the business and the key figures and factors that make it tick, both now and next month when things will surely be difefrent. And make sure the key figures are at hand regularly, not just once a year looking back 6 months when the auditors come in!
- ‘The customer is king’ – If the customer is king, then you should be God, otherwise all you have got is a different paymaster. You set up in business to be in control of your own destiny, make sure that you are. Do not allow the situation to develop whereby you are reliant on one or more key customers who ‘pull your strings’. If you are already in this situation, recognise it, change it over time, you will enjoy life far more for it. And you will reduce the risk of the business not succeeding.
- ‘This time next year, we’ll be millionaires’ – It took the Trotters 7 series to become millionaires, despite all their efforts, and even then only by chance. Building a sustainable business takes a lot of hard work, it requires a far greater commitment, and not just in terms of time, than when you worked for someone else. You have to be doing most of the right things at the right time, consistently. There’s no hiding place, you must be at the forefront of every battle, prepared to lose the odd fight, confident that you will win the war. If you have never had, or had and have lost, that courage and drive, give up now before the business is taken from you.
Being in business in 2011 is going to be harder than you could ever imagine. Keep testing the water. Recognise. Take action. Innovate. Move on. Test the water again. Recognise. Take action ……….. You’ll see a huge difference over 12 months.