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Enjoy Your Chosen Path...
I recently worked with a gentleman who was running his family’s 3rd generation business. Actually, he was running it right into the ground. Losses in 2008 were $500,000 and he had changed exactly nothing for 2009. So under the very best conditions he would lose another $500,000 – probably more. At some point, I suspect, that starts to hurt.
A quick review of his financials spelled out the horror in clear detail and I stumbled into our conversation with something as subtle as… “You’re going to be out of cash in five months, miss payroll that week and have the doors padlocked soon after. The good news is that your business is extremely fixable and we can get you cash positive and profitable long before anything bad happens. You are a wise man to have reached out for help now while there is still time but we are going to have to act quickly – are you ready to take charge of your business?”.
His answer was that he was unwilling to make significant changes and didn’t want to upset his employees.
A long uncomfortable silence followed while I searched the right words. Certainly bankruptcy would upset his employees.
Without relaying all the details, I coached him towards change over the next several days and realized that my blunt approach had a negative effect on my client. I needed to slow down, spell out the issues and help him see what was so obvious to me.
By day 4 he had warmed up to making some changes and understood what I was saying about cash. He was still more willing to spend his retirement savings to keep the business afloat than to make appropriate changes but we were making progress.
As a business owner it is often hard to take an objective look at your business. Your bank, your vendors and your employees all expect you to be the leader but it is a demanding role. The decision probably comes down to cash – if you can afford to maintain the status quo then, why not. Go ahead and enjoy it. If you can’t make it through, then you need to make some changes. Change in an economy like this can be intimidating so don’t be afraid to ask directions.
Jeff Sands helps challenged companies as a Director with Dorset Partners. They have recently published The Turnaround Roadmap which is available as a free dowload on thier website www.DorsetPartners.com