Case Study: “Welcome to Work…That will be $246.57 please.”
Imagine you wake up tomorrow morning. You have two bites of toast before you have to race out the door. Put out a few fires on your blackberry en route to the office. Once you arrive at your office, you are greeted by a credit card terminal attached to your locked front door. A voice comes from the terminal, “Welcome to work…that will be $246.57 to open the doors to your business, please.”
Sound crazy? Oddly enough, this scenario (minus the talking credit card terminal) is not that uncommon. The following case study examines how close we can be to the problems plaguing our business without recognizing the severe danger they present to our personal and professional futures.
Not long ago, a business owner came to Charles Tenney Associates with considerations for selling his business. CTA agreed to examine his options for exiting the transportation industry.
Long story short, he had nothing sell. He had lost over $90,000 in 2006 and was finishing 2007 in the same fashion. To pay bills and keep the doors open, the owner was draining his own retirement funds that he had developed over the past 30 years. That is $180,000 lost over the past two years. Worst of all, he intended to continue infusing his personal money into the business at the same level in 2008
Business owners rarely answer to anyone. That freedom is one of the greatest aspects of business ownership. However, often with that freedom, combined with a lack of accountability, comes the tendency for business owners to pretend the problems plaguing their business are “not that bad” or will somehow correct themselves. When CTA spoke plainly to this owner about the state of his business, reality set in and he stopped pretending. It was costing the owner $264.57 per day just to open his doors .
Actual Calculation: $90,000 divided by 365 days = $246.57 per day
That statistic got the owners attention. It is not that the owner did not realize his business was struggling badly. It is just human nature to downplay the impact of our own failures—even to the detriment of our financial futures and the futures of the ones we love.
The owner only had a few options:
• Close the doors immediately to stop the bleeding. Take the loss and move on.
• Implement emergency strategies to minimize further damages in order to stabilize the business and hopefully secure additional options moving forward.
Believing he still had some fight left in him, this particular owner chose to hire CTA to help stabilize his business and get him in a situation to have more options. There would have been no shame if he decided to close his doors. That decision would have been far wiser than continuing down the same path.
The most important lessons in this study are:
• The tendency for business owners to downplay problems is very common and extremely dangerous. It took a clear dose of reality from an objective source for this owner to get serious about the severity of his situation.
• If after taking a dose of reality, you realize it doesn't taste very good, Choose to change. Change requires a choice. If you expect a different result, going down the same path is no longer an option. Choosing not to change is a decision to nurture the very cause of the problems plaguing your business.
Maybe you are not losing $90,000 per year. Maybe you just suspect there has got to be a more efficient way to do business in this industry.
If your business is struggling or if you sense you are failing to be objective and “real” about the challenges facing your business, please submit the contact form below and a CTA consultant will be glad to speak to you.
