Are you ready to change? The reason most successful businesses don’t survive is usually quoted as cash flow problems. But really isn’t that the eventual outcome of almost any bad decisions or management? The reason for the loss of cash flow is what we need to learn. Even big companies like Kodak and General Motors who had lots of cash available to them for many, many years fail because of bleeding balance sheets and more outflow than income. That is like asking why did the stock market go down? Answer: Because there were more sellers than buyers! What is there to learn from that if we don’t dig deeper to find out why? Not all the answers come from the accountant and if you take the time to study human nature you might find that you don’t need numbers quite as much as you might think. For instance, just knowing what our human tendency is when we have a string of successes is worth a lot of numbers. Most amateurs that win big in the stock market turn around and loose it again and most big companies find it very hard to change.
So many of the business failures over the years come from an unwillingness to change and innovate. Even when the numbers are there screaming that you need to! Kodak and General Motors had enormous market share for years but before they lost market share and went bankrupt their profits began to dwindle. There are usually lots of red flags before a crash not just one. It is like the chain of events that leads to a crash. It is a chain or series of events with lots of links rather than one big one and that means we are building on bad choices (or vices depending on how you look at it). The rule in an accident investigation is that by removing one link in the chain of events that lead to a crash you can avoid a crash. Just one bad habit or bad decision removed and your business can avoid a crash. Just one, not all of them! Of course you wouldn’t want to stop there but think of finding one reason that your business might fail and fix it.
OK, how about being unwilling to change. Markets and people and economies and governments change and no one is safe from it! Start looking for old ways of doing things in your business that haven’t changed and see if there might be an opportunity there. If you think about ways that your business or industry has become stagnant you might improve your business before bad news ever shows up in the numbers. It is a little like that early morning workout, the older you get the harder it is to get started but you are always glad when you do!
So many of the business failures over the years come from an unwillingness to change and innovate. Even when the numbers are there screaming that you need to! Kodak and General Motors had enormous market share for years but before they lost market share and went bankrupt their profits began to dwindle. There are usually lots of red flags before a crash not just one. It is like the chain of events that leads to a crash. It is a chain or series of events with lots of links rather than one big one and that means we are building on bad choices (or vices depending on how you look at it). The rule in an accident investigation is that by removing one link in the chain of events that lead to a crash you can avoid a crash. Just one bad habit or bad decision removed and your business can avoid a crash. Just one, not all of them! Of course you wouldn’t want to stop there but think of finding one reason that your business might fail and fix it.
OK, how about being unwilling to change. Markets and people and economies and governments change and no one is safe from it! Start looking for old ways of doing things in your business that haven’t changed and see if there might be an opportunity there. If you think about ways that your business or industry has become stagnant you might improve your business before bad news ever shows up in the numbers. It is a little like that early morning workout, the older you get the harder it is to get started but you are always glad when you do!
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