“My company keeps bumping in into a ceiling and we”™re struck. We”™ve been at the same size for a few years. I”™ve cut just about every expense I can and profits still drop a little each year. How do I get things in gear before they get worse?”
Thoughts of the Day: It”™s all about protecting that valuable asset that provides for every business owner”™s lifestyle. For most business owners, the business takes top priority, after their families. All businesses go through stalls and the challenges of what to do next seem insurmountable as the owner runs out things to try next.
Business owners”™ egos and assets tend to be very directly tied to the future health of the business. When a business heads into troubled waters, the owner isn”™t just dealing with a set of business problems and the price of failure can be devastating: Loss of retirement, debts that have to be repaid, lack of steady income, a sense of failure, concerns about letting employees down, disappointing the people who have helped the business going, loss of standing in the business community and a personal sense of failure.
Owners work hard to get their businesses off the ground, facing big risks and the odds of failure are incredible odds of failure. If they survive the early stages, the challenges of what to do next may seem overwhelming. But, the truth is that only 20 percent of businesses survive after the first five years as owners overcome significant obstacles to get the business off the ground.
Oddly, each 10-year cycle that the business enters, only one-third survive, which means that the odds of success don”™t change. There is no significant advantage derived from longevity. But at some point the owner maxes out what they know how to do, how to help the business push forward. That”™s when things get can get really dicey.
Building a long-haul business that can provide for everyone as the economy and world march forward is essential to the company”™s long-term future. At a stall point, it”™s important to look outside the company for solutions. Adding new ideas and new practices in areas including sales, marketing and finance can be keys to a bright future.
Unfortunately many business owners waste time and resources thinking they should be able to figure things out. They”™re self-reliant, “I can do this myself, I should be able to figure this out” attitude got them this far. They don”™t understand why that”™s not enough going forward.
The question is what to try next. It”™s about more than just getting the business back in gear. It”™s about building a business that can thrive through multiple up and down cycles without depending upon the owner.
It”™s about more than hiring one key employee who seems to be missing from the team, although that may be a useful step to take. It”™s about building a team that can learn, grow and solve problems together. It”™s about having a common set of goals, in writing, that everyone agrees to work toward. It”™s about meeting regularly to share information, work on issues, debate the best solutions and agree on the next course of action.
Something like 90 percent of businesses don”™t have a written set of goals that everyone has agreed to work toward. There”™s no budget or forecast to guide financial decision making.
It”™s about building and implementing the tools of a next stage business, in writing, so that everyone can follow along. That includes a sales plan, a marketing plan, a bank plan, job cross training, job descriptions and a clear organization chart detailing who goes to whom, for what. It”™s about measuring and managing progress through written reports that include key measures, profit ratios and critical success factors. It”™s about spreading management across a team of competent executives who represent the interests of finance, sales, marketing, operations and human resources. It”™s about learning to treat the business as a business, rather than the owner”™s personal piggy bank.
Andi Gray is president of Strategy Leaders Inc., strategyleaders.com, a business consulting firm that specializes in helping entrepreneurial firms grow. She can be reached by phone at (877) 238-3535. Do you have a question for Andi? Please send it via email to AskAndi@strategyleaders. Visit AskAndi.com for an entire library of Ask Andi articles.
