After 30 years of consulting to large and small businesses, sometimes successfully, sometimes not, I see two conditions a troubled business must meet to avoid failing.
1. The problem must be addressed before it’s too late.
This may seem entirely too obvious but when people are at the helm of a failing business it is very hard to accept it when the time comes to quit. There are ‘Dips’ as Seth Godin calls them and there are cliffs. When a business goes over the cliff, it won’t survive the fall. Many small business owners continue to struggle in spite of having a business in free fall because they either do not recognize the severity of the problems or cannot see an alternative path. They struggle way beyond the point of no return before they call in outside guidance.
2. There must be a desire to change the way things are done.
Obvious again? Sadly, most businesses that get into deep trouble will continue on the same course until the resources are gone. This is especially true of businesses that experience early success. Success teaches us [falsely] that we know what we are doing. Success gives a false sense of ability. A successful launch brings accolades which feed the ego. We like hearing how brilliant we are. Early success glues the business owner to a track because that track works. Actual success is measured in years, not months.
There are people who actually believe they have a system to win with slot machines. They ‘know’ when a machine is ‘due’. They know how to put the odds in their favor by using a system that worked at some early point in their gambling experience.
I often will stand in front of a class flipping a coin as the students come in. I’ll go through the motions of writing down my results. I’ll even pretend to look a little amazed. When I start my talk, I’ll open with something like, “before I get started, I have to tell you that I love to experiment with chance. After all, much of business involves risk so I’m naturally interested in the subject. As you were coming in, I was flipping a coin. I actually got 7 heads in a row. I wanted to keep going but it was time to start class. But I really want to flip again. 7 heads in a row. Wow. What would happen if I flipped again?”
Most people will ‘predict’ tails. It’s time for my steak to end. Many will select heads because I am on a streak! Small clumps of luck make us believe we have figured out something that is due to pure chance.
By the same token, a run of bad luck can seriously undermine confidence.
Either way, thinking we have a system leads to resistance to change. A business on the way down that gets a lucky break will continue with the same bad habits and eventually fail.
What if we catch the problems in time and are willing to make adjustments? There’s an excellent chance that the business can be fixed.
Why do I sometimes fail to help a business come out of a dive?
Sometimes it’s just too late.
Sometimes the ownership is locked into what they think they know. Sometimes owners are fooled by luck into believing they know what is best.
I may not always be right. But if a business is in trouble and an outside evaluation is sought, shouldn’t it be considered as being possibly valid?
Chris Reich, Business Adviser