Tips To Avoid Business Failures
Jack Welch, General Electric’s legendary former CEO, once gave a sound piece of advice to aspiring businesspeople. Someone asked Welch, after he spoke at the Entrepreneurs’ Organization, the world’s largest network, what his counselling to an entrepreneur was going to be.
Is Jack’s answer? “Faster panic.”
By their very nature, entrepreneurs are positive, optimistic and certain of their business. These are great qualities to promote your company, but the same characteristics will work against you if things don’t happen as expected and the business begins sideways.
Entrepreneurs can read their own press to such an extent that they can’t see what is really going on around them, and cannot respond quickly to dangerous signs.
Because of fear of the unknown, businessmen often freeze or believe that things don’t happen. They put off the inevitable, they don’t want to make difficult choices such as letting employees go or cutting costs. They mess with emotions and the effect is inactivity.
Then they’re out of business before they know it and have lost everything.
Here are a few tips on how to stop this worst-case scenario. There are some basics that can distinguish between success or failure. If you know how to deal with adversity, the next major success will not stand in the way.
As Jack Welch said, you cannot stand by waiting for better conditions. When things go wrong, drop it all and define where the problems lie. Spend 20% of the time on the issue and 80% on the solution.
It is essential to monitor the message, particularly in small, early stage environments. When you begin to worry, the chances are that the rest of your team will do the same. Remember, your employees will be closer to business dynamics, sales patterns, and financial matters than yours in their daily tasks, and may know what’s going on before you and be more likely to believe it than you are.
If you have issues, you have to go out in front of your people. Your team is going to wonder three things: What is going on? What is going on? How is that affecting me? Am I going to lose my job? You can answer these questions, but it is equally important to reflect on them in a positive way. You have to challenge them to learn from this experience to help turn it around and win more market share.
Get the input of all
You’ve got an intelligent team in place. Use this skill to help diagnose problems. Employees have also already found this issue and come up with a solution before you even know it, but they are simply not empowered or inspired to speak up. The solution of team problems should be part of your culture. Engage and inspire others to take ownership.
Use the network
You should have a Board of directors, a group of mentors, a team of professional advisors and possibly investors, whether it is formal or informal. Over the years, you have met them and asked for their advice because they are excellent at what they do. You know that young businesses face challenges. Do not think that in a tough time you are losing face by asking for advice. Don’t be embarrassed or scared of admitting faults. You were there before, and you’re here to help.
Experienced entrepreneurs are usually keen to give a hand to a colleague who genuinely asks for it. One of the most valuable lessons I have learnt is that the effective people are generally the most available. They are all part of a successful group of other people who will support one another if possible.
Go ahead of your customers
At times, you can get out of the office and into the market even more effectively. Go on a plane to see your clients. Learn about your company and the changes you face. Maybe they have a new necessity that you can satisfy, a pivot to your current product or service. Also making your presence felt will ensure that your customers are attentive to their needs.
If your company has issues (and if it doesn’t), it is vital to be honest with your customers. You want to control the conversation about any problems with your business, rather than allow someone else to define those problems for you, just like a rival. You can build trust by being up front. Your customer might also be able to help you design a solution.
Cut quickly and cut deeply
If you are in real trouble with your money or if you don’t have the right people in a crisis, it can trim your team. Leaving people is one of the toughest work a businessman has. You will not only feel that you have failed to manage your company, but have failed to provide for your employees. But you can’t paralyse you like that. Your partners, clients, family and the rest of your staff have a greater obligation. You have to cut the limb often to save the patient.
Don’t wait when you see the layoffs are unavoidable. Moreover, these cuts never increase. Small cuts will ruin the company as everybody will spend their time looking over their shoulders to wonder if the axe will come next rather than concentrate on their jobs. If you have to cut, do it quickly and thoroughly. You can then reorganise, restore, and start recruiting in better conditions.
Keep The Horizon Eyes
It is possible to get stuck in the trenches, to be so distracted from the bullets that you fail to survey and take a big picture. This will allow you to find the right way out of this difficult time.