The Stuff Counts

The Stuff Counts
February 4, 2013 Anne Wade

Friends of are mine are going out of business. I am watching them crash and burn before my very eyes. These are two very fine women who have put their hearts and souls into serving the community with a much needed service. It was doing okay for the first couple of years–or so they thought–when suddenly things seemed to fall apart. Unfortunately, by the time they realized something was wrong it was too late; they are being forced to close.

While the closure feels rather sudden to them, the reality is that they crossed into the red zone a long time ago. Warning signs started to appear fifteen months back: a new competitor, expenses exceeding income, employee turnover, growing too fast and a dramatic increase in debt. To their credit, they made some moves in an attempt to correct the imbalances; unfortunately, their actions worsened, not lessened, the overall state of affairs.

What they couldn’t (and still can’t) see is that the primary issue is them; neither partner had an ounce of business experience. They mistakenly assumed their passion coupled with a few outside professional services (attorney and accountant) would be sufficient. It wasn’t nearly enough, certainly not for this particular type of business and size of their operation, which is around a half million dollars.

They, like many other entrepreneurs, don’t understand that when applying for a business license there is more to the process than just passion or skill. It may the impetus but can’t be the sole attribute in operating a business effectively. Fundamental management practices apply to all businesses, guiding day-to-day operations. I am talking here about the basics, such as the established principles of profit and loss, sales, staffing, communications and web site, just to name a few. On one level or another, these functions must be addressed regularly in order to sustain and grow in the marketplace.

My friends went astray when they tried to fit the management of their business in between serving clients. Day after day, one management task after another got set aside. The fundamentals weren’t even in the equation. The core issue was leadership; no one was responsible for running the business. Neither partner liked the mechanics of business so they mistakenly assumed their passion combined with an occasional online course would make up for any deficiencies. The concept of a business manager was not incorporated into their business plan nor realized as a potential remedy.

It’s a heartbreaking example of failure that could have been avoided. The point here is that if you can’t or don’t want to manage, hire someone who can. The mark of a good leader is the ability to discern strengths from weaknesses and compensate for any shortfalls. It’s perfectly okay not to have a clue; however, take responsibility for it, plan for it and then enjoy the role that best fits your talents. I encourage any small business owner reading this article to take a step back, reflect on what is working and what is not.

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