Businesses fail; it’s that simple. No one wants to see a business fold. However, there are times when no amount of money, time, work or focus will keep a business from going under. Of course, as the recent recession showed, other factors like economic downturns, regulatory policies and market shifts impact a business’ ability to generate sales and succeed, to keep from becoming another business failure.
Sit in a boardroom with members of a senior management team and you might find that you’re starting to be looked at as the cause for a business failure. It seems to come with the executive turf, the need to blame someone for lack of sales, poor management decisions, high employee turnover . . . you name it.
About the only way to steer clear of these muddy waters is to keep detailed records of business discussions, meeting notes and directions you were given from senior staff. If you don’t keep clear records, you could find yourself in a very uncomfortable she said/he said debate, not what you want.
Cash flows also have to be watched (closely). This includes tracking utilities expenses, real estate costs and payroll costs. Hard decisions have to be made to steer clear of business failure. Because we have blind spots, build a strong team.
These people should be unafraid to speak up and tell you what’s working at your company as well as what’s not working. There’s little worse than paying senior leaders hundreds of thousands of dollars only to discover you paid for no more than head nodders who are too timid to tell you what you may not want to hear, even if it’s what you need to hear to avoid business failure.
Be open to change. You may need to cut staff, relocate or cut work hours until revenues rise. Have the courage to have uncomfortable conversations. And remember that what appears like business failure may be a lesson.
Henry Ford said, “The only real mistake is the one from which we learn nothing.” Even if you experience a business failure that forces you to shut down your business and start over. Walk away with lessons learned. Infuse lessons that you learned from your first business failure into your new company.
For example, you could add a warm approach to cold calling. You could bring on temporary workers or contractors during the first two years that your company is open. This option allows you to control real estate costs. You could also barter with other entrepreneurs to fill marketing, advertising, packaging and bookkeeping services.
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