Owning a Business is Difficult

Perhaps you now face a competitor’s new product on the market that sells like hot cakes, stealing your market share percent by percent.

Maybe a valued employee leaves your company, after you’ve sent her at a $5000 seminar and confided your five most exciting growth ideas for next year.  Your most reliable supplier discontinues a chemical you require for your product line and customer demand is in the triple digit range.

Business life, even as we strive with dignity and class, is usually messy and inconvenient.  Did the thought ever cross your mind – “This wouldn’t impact a Fortune 500 company.  No way! They’re bigger.  They have other divisions to absorb the loss of this product.  They have more people and can switch gears quickly.”
Your thoughts are certainly realistic and I’d like to add one tidbit of information – Fortune 500 companies can trip over their complexity.  Many large companies may know what to do and the big question for them is:  Can they deliver the results they promise and in what timeframe?

Small companies must use everything they can to succeed.

In his new book,The Strategy Paradox, Michael Raynor states, “The external environment in which we find ourselves is very uncertain, where changes in regulations, the economy, competitors’ behavior, customer preferences or new or disruptive technologies could each, or in combination, dramatically change the operating landscape.  The ability to take bold action with urgency, while maintaining strategic flexibility has never been more important.”

I invite you to please share your musings and thoughts as you concur that we are not alone in the entrepreneurial journey……

The Reality Principle in Run Your Business Like a Fortune 100 is straightforward:

You need to have a good grip on reality to build a successful business. All your hopes and dreams go for naught if you miss what’s happening in the here and now. The Reality principle offers you the opportunity to look at these important and common experiences:

• Facing facts
• Responding to disasters
• Committing to your business
• Dealing with uncertainty
• Letting go

But what happens when your reality is more like the world on the flip side of Alice’s looking glass?

When I joined a young online advertising company in 1998 as vice president of sales & marketing, my mandate was to increase sales revenue at any cost. One dollar of top-line revenue was worth $32 in valuation, based on the performance of a company similar to ours that had already gone public in the internet IPO frenzy of the late 1990s.

We’ve since learned that when bubbles burst, everyone gets wet. Unrealistic expectations based on unproven business models bring failure and pain. We saw it in the tech collapse of 2000-01 and we see something similar in today’s banking crisis.

For dot-coms, it was essential to recognize a new reality. No revenue? No problem! A business model, a head-start over competitors, and tons of traffic generated by Super Bowl ads could trump actual earnings.

Seeing things as they are is not a virtue in an industry built on vision. But who could resist the thrill of living without P&L pressure? Several months into the job, my team was growing and producing. Sales doubled every quarter and I had to admonish sales execs to enjoy the good times while they lasted. To drive home the point, I brought a huge laundry basket to a weekly sales meeting and told each seller to get one like it. At the peak of wild venture capital investing, they’d need bigger baskets to hold more orders, which were pouring in faster than we could catch them. In 20 years in business, I’d never seen anything so fantastic - so like a fantasy - and I knew it could not possibly last for long.

One morning my CEO approached with a piece of paper in hand and a gloomy look on his face. He put the paper on my desk and said quietly, “there’s black ink on the bottom line for last month.” Ok, I thought, my heart suddenly racing, that’s a good thing … right? I’ve been hiring, spending outrageous sums on ads, parties, trade shows and tchochkes, and sales have been so strong that we’re becoming profitable well ahead of plan! Success was at hand and an IPO was, too. Soon we’ll all be mortgage-free!

Wrong. My CEO cut off my little daydream with this gem: “Don’t ever let it happen again.” And he left. It took a while to sink in, but finally I had to face facts. In the race to the top of the web, red is the new black when it comes to ink on the bottom line. I had mistaken the need to show consistent, extravagant investment in headcount and marketing for a carelessness about profit and loss. Show me the losses, investors seemed to be saying, and show me how you are going to dominate your niche before we take you public to lose even more money.

It seems almost quaint now. IPOs are rare and only for companies that have a track record and profits. Investors are less patient than they were in the 90s. Profits are still hard to attain and harder still to increase.

What’s the lesson? Know your reality and let go of unrealistic expectations. Face the facts as customers and investors see them, and within the requirements peculiar to your industry. Respond appropriately, knowing that everything may change tomorrow.

What twists and turns have you experienced in adjusting to changing requirements in your business environment?

Optimistic and independent by nature, entrepreneurs see opportunity in today’s gloomy headlines. Instead of government handouts, they actively seek and adopt the best practices of successful companies to build their organizations to greatness. But acquiring such intelligence usually costs more than a growing company can possibly afford.

Tuned to the needs of ambitious, growing companies, my new book: Run Your Business Like a Fortune 100: 7 Principles for Boosting PROFITS - demonstrates how entrepreneurs can position themselves quickly in tumultuous markets, integrate change faster, operate without bureaucracy, and become more profitable than larger competitors.

My experiences, illustrated in the book are from companies of all sizes. I’d love to learn about your experiences and hear your stories.

• Position only for growth – evaluate your possibilities
• Reality – face the critical issues
• Obtain vital information - recognize what’s important to customers
• Flexibility – ability to adapt and shift gears
• Integration – link all aspects of your business
• Test and review – scoping the strategies you have in place
• Steering the company – effective and efficient interaction within environment

Let’s work together to turn our businesses into reliable generators of profitable growth year after year, without investing millions of dollars and many years. Let’s work together in turning our profitable companies into great ones.

The purpose of this blog is to create a community of like-minded entrepreneurs and intrapreneurs and to all learn together.
I welcome your participation and thank you in advance for joining an ongoing dialogue.

Warm regards, Rosalie