E-News - Top Three Reasons Business Fail, Part I
Top Three Reasons Business Fail, Part I: As always, especially in the case of my newsletters or blogs, I enjoy giving credit where credit is due. If you’ve attended any of my boot camps, I hope you noticed this quote on front wall of the training room, right above the whiteboard: “There is no such thing as normal – only next!” These wise words were shared with me by a very good friend and gifted business mentor, Mr. David L. Sullivan. Dave has helped me on a variety of projects, and I have had the privilege of listening to and learning from him in many of his classes. Some of the most important things I’ve gleaned from Dave are the top three reasons businesses fail, and I find it poignant to share these valuable lessons with you, since we all strive to not just survive, but thrive. First, let’s discuss Reason 1: High Growth Without Competency.
High Growth Without Competency
Like you, I receive much email, direct mail, and many phone calls reminding me that my focus should be on growing my business fast. In fact, it was an email yesterday that inspired me to write this, an email that coerced, “Learn the mystical ways of fast growth…” Mystical ways? I don’t know about you, but I have found nothing mystical about it – unless blood, sweat, and tears can be considered mystical.
First and foremost, you must ask yourself why you are in business. If you’ve rushed out to print off your fancy business cards in the hopes of getting rich quick or impressing someone, you’re more likely to fall into the snare of so many quick-growth schemes that seem to spring up every day. If, however, your desire is to grow a solid, long-lasting company, to provide a good living for yourself and family, to create a way to help others, or – best of all – any combination of these, you will recognize that slow, consistent growth is what’s needed to sustain you, even during the most volatile of economic storms. There is a parable in the bible that talks about a foolish man building his house upon the sand and the wise man building his house upon the Rock, and this applies to business too. The solid foundation can withstand many storms. Sure, it may take a little longer to build on something more solid, but when the storms come; you’ll still be around.
Dave makes an excellent point in saying that high growth without competency is one of the leading causes of business failure. Time, people, and money will be crucial to your business success, but these must be handled with the utmost care and competency. Otherwise, you’ll be employing a ready-fire-aim tactic. Is that really the best strategy for success? No, and it certainly isn’t competency.
Time is something we all have in common. As long as we have a pulse, we have twenty-four hours a day, seven days a week. We all have the same 365 days in our years. If you don’t use some of that time to consider the original question, why you are in business, you are probably not taking the time to think and plan about the future growth of your company. Many contractors tell me they are just too busy to ponder such a deep, philosophical idea, but I have to ask how long they’ll stay busy if they don’t. I recall seeing a comic strip in which valiant soldiers of old were attempting to defend their castle with single-shot muskets. One brave, young fellow approached the castle gates, prepared to sell them machineguns, only to be denied a meeting with the captain. “I am too busy fighting a battle to listen to a salesman,” the captain said, while his soldiers fell around him due to lackluster armaments. Taking the time will get you the best results.
People fill positions within your company, and while you can hire whomever you wish, developing a great team will take you places your competition can not go. Jim Collins, author of the well-known Good to Great, quipped, “Great vision without great people is irrelevant.” How well your business performs often depends on how well you've trained and developed them, how well you’ve prepared them for the task at hand. How many hours a year does your team spend in training? How many hours a year do you spend developing the skills and talents of those around you? Do you limit individuals from learning more? At McAfee, we have weekly departmental meetings and leadership team meetings, and company meetings involving everyone are held every other month. This keeps everyone in the loop and on the same page, informing the entire McAfee family about expectations, goals, and just basic company information.
Money is listed last for a reason. Human beings are prone to chase after it, and many spend their lives looking for that elusive pot of gold at the end of some rainbow. However, money should be viewed as more of a consequence than a goal. If you focus on managing your time and developing your people, the money will come. I began McAfee with a humble $274 and a used truck (incidentally, one without a/c), and remembering from where I came keeps me on track today. In a recent interview, Suze Orman, personal financial guru, stated, “Money is the currency of life, and it is there to teach you about yourself.” She went on to explain that we should use money as a teacher to discover who we are and what our business really is. Now, by no means am I suggesting that you give up your ambitions or that you stop striving for growth and success, financial or otherwise. What I am saying is that you must become more conscious of how you define success for yourself and business. If it’s all about the green, you may have some rethinking to do.
Working capital is liquid money for a company to spend on regular business expenses. In the accounting world, it is often referred to as the difference between current assets and liabilities. As a business consultant, I often hear heartbreaking stories of tight budgets, but one people often fail to recognize is too much growth too fast. Truly, taking on too many jobs or tasks too large for your company to handle will not help cash flow; rather, you’ll be facing just the opposite, in the form of disappointed customers and bad word-of-mouth.
Take some time to think about how you handle your time, people, and money, and set realistic goals that your business can handle, and your chances are much better you’ll be around for decades to come.
Sneak-Peek Preview: Top Three Reasons Businesses Fail, Part II: Fear of Investment
HVAC Business Consultant