Monday, 25 June 2012

What to do when your business goes wrong

There's two reasons why things don't go the way we want.

1. The Universe is a source of infinite possibilities. You're doing the right thing - more or less - it's just that you can't plan for everything, and something just slapped you in the face for trying:

2. You've got it wrong. The Universe and a number of your colleagues and customers have been trying to tell you so, but you won't get the hint until they explain through the medium of breakdance to a soundtrack co-written by Björk, Metallica and Wagner, sung by Ruby Wax and a backing chorus of penguins.

The trick is to identify which category applies.

Yes, I'm being flippant, but the principle stands regardless. As I'm hinting, the problem is often ego: we're damned sure we've got the Next Big Idea, and despair at a Universe that doesn't "get it". So how do we tell?

Now, I'll admit I'm no expert here - but I've run six companies to date, with results varying from complete success to abject failure, so at least I've some experience and a few mistakes from which to winnow an answer.

And that answer seems to me to be metrics: impartial ways of analysing your idea, your approach, your cashflow - to find what's good and what's bad. If things are going wrong, you need to find out where the point of failure is, and be prepared to discover it's you.

Every company has a product, whether that's a widget or a service. That's the starting point.

If it's not selling, find out why. If it used to sell, but isn't now, what's changed? If it's selling, but not making money, understand your cashflows: are you charging enough?; are your overheads too high?; have your unit costs risen unnoticed?; do you have a problem getting invoices paid on time?; are returns killing your profits? Is your marketing pitch-perfect, being seen in the right places, and cost-effective?

It's by no means a comprehensive list, of course, but it's intended more to help you stop and try to take an impartial view. If you find that too difficult because you're "too close to the business" - and a lot of people do, it's not unusual - buy in an outside opinion. A business consultant to look at your business end-to-end. An independent accountant to scrutinise the cashflow model. A surveyor to poll your customers, current and (critically) past. A marketing consultant to examine how you're promoting your business and products, and check your media coverage for message and volume. If you're uncomfortable with any of these, that's probably the one to go for first! (We instinctively avoid exposing our weaknesses - it's a primal thing.)

If you don't understand why things are going wrong, and getting in help sounds too much like admitting fault, then - excepting Divine intervention - your business is doomed anyway: sorry, but that's how it is. The outcome might be that anyway, but at least you can walk away with your head held high, and eyes on the next chance.

On the other hand - and even now, I believe this is the most common outcome - you may well find that there's a kernel of value in the business that just needs food, water, time and effort to germinate into profits, if you've the will to do what's needed.

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