As a business owner are you prepared for what may be lurking – or prowling – around the corner?
You can’t preempt every scenario that may come to test you, but keeping your eyes firmly fixed on the road ahead is integral to business growth and boosting profitability. I say this from my experience as a business strategist who has worked with owner managers and family businesses from Harrogate to Harwich in the UK – and from Denmark to Durban on a more global level.
During a mega cycling adventure in 2007 when I cycled 3,500 kilometres down the west coast of North America from Canada to Mexico over seven weeks – I came within 30 feet of a formidable grizzly bear!
I was enjoying the tranquility of a dewy early morning when careering around the corner of empty highway I found myself hurtling towards the big brown bear. I was going too fast to stop; the bear was too close – and I was headed right for him.
What is your nightmare scenario as a business owner and are you prepared in case it becomes a reality?
I worked with a sales director from a Yorkshire-based family business who found himself face-to-face with his worst case scenario. Let’s call him Matthew.
Matthew’s father, who headed the company, suffered a stroke and was rushed to hospital, leaving Matthew in charge. His father had always reassured him that the business, which had been in his family for generations, was extremely successful but Matthew quickly discovered it was on the brink of collapse with creditors baying for payment.
Matthew had little experience of financial matters, and had nobody with whom he could discuss the situation. He was terrified and did not know what action to take – or what he wanted.
What would you do if you were in Matthew’s shoes?
These are the steps he took:
- Although Matthew didn’t know what he wanted, he knew what he didn’t want. He didn’t want the business to go under. He didn’t want to put his family at risk. At the same time, he hoped that he wouldn’t have to work around the clock to bring the business back from the brink because he was convinced that a punishing work scheduled had contributed to his father’s ill health.
- Matthew also knew what he didn’t know – such as how to interrogate management accounts. Like (too) many CEOs, he was financially illiterate and knew that, because of the pressing nature of the situation, he didn’t have time to learn.
- With the company just days away from closing, Matthew realised that he needed to bring good people in. He found a highly-recommended management accountant who adopted a highly strategic focus. He helped Matthew to restructure the business, took control of the numbers – and accompanied him to the all-important meeting with the bank.
- Together, Matthew and the accountant looked at the three ‘C’s: Cash, Customers and Costs. Cash: how could the company generate cash quickly? Customers: which customers were unprofitable? Costs: it was time to face up to the brutal fact that a profitable company with a reduced headcount was preferable to a company that employed twice as many people, but was going bust. Matthew cut his staff roll by half – and the bank agreed to a refinancing deal.
Matthew’s father recovered from his stroke, and has since retired. As for Matthew: conquering his worst fear has given him the confidence to move forward. Today he isn’t a financial wizard, but he is on top of his numbers and he looks to the future, rather than the present. The result: while his industry is in a state of near-collapse, Matthew’s company is thriving.
As for my own worst case scenario, I didn’t crash into that bear. It was too late to scream, shout or do anything. At the last possible moment, the bear took the wise decision to slip away into the heavy undergrowth at the side of the road and was gone.
What came of the experience was adrenaline pumping fast and furiously: I cycled for another three hours without stopping. I discovered that facing your worst fear isn’t pleasant, but it is exhilarating.
How have you tackled your worst fears?