Her small business was always busy, her clients loved her team’s work, yet her company kept losing money.
It never seemed to worry her, so the team chose to focus on the exciting new product ideas she kept coming up with.
Here was a perfect example of the Myth of Business Busyness:
- Assuming that if we are busy then things will work out well
- Being impressed by busy people, as we assume they are successful (see the recent research in the Harvard Business Review)
- Forgetting to build in down-time to rebuild the cells in our brain (see recent Neuro Science)
Years of running the business this way was hiding an even more damaging secret: the owner was carrying years of business debt and time was running out.
The first step was the most important – to face up to the reality and tackle the problem.
When things are difficult – and they were as words like ‘bankruptcy’ flew around with all the blame and guilt – we all learnt that it is exactly at times like this that you need to trust in a process and follow-it through. Our process of choice was the 9-Dimensions®:
red01 Reality: We helped to create a climate whereby they could pause and just do the maths: on the amount of money being lost to interest rates; on the jobs making money (we called them green jobs), on all the other loss-making jobs (we called them red jobs). It turned out that the old classic of Pareto’s Principle was true for this business: 80% of the profit was coming from just 20% of the jobs.
red02 Identity: Putting the issues to one side, we asked the owner why she set this company up in the first place. We asked questions like: “How could she re-discover what she loved doing?” and “How could she use her natural talents as strengths rather than as weaknesses?”. She remembered three types of work that she loved, and we focused on how we could make these three profitable.
red03 Vision: She chose to see the ‘week-by-week’ calendar turning from red jobs to a sea of green, pulling the business out of debt within three years, in an enjoyable way doing what she loved doing – without her having to work all the hours to rescue this.
The team agreed on four Must-Wins:
- Finding a way to pay off the capital and not just the interest on the debt
- Short-term: focusing on selling the profitable “Pareto Principle” jobs
- Medium-term: Finding a way to profitably deliver the three jobs the owner actually enjoyed, and start sourcing or just stop doing the other jobs
- Exploring the new bespoke (but time-consuming) product the owner had recently been successful with, aiming to sell just one per month…and for this to go directly to debt repayment
We met up with the owner last week. Whilst she’s got a long way to go, we were delighted to hear that she’s found a new way of charging for her core product in a way that seems to please the clients with her reasonable costs yet also giving them more choice over the linked extras from other suppliers that were hidden before.
A good reminder for us all to check that we are using our time profitably…