I Am Furious. Really Furious.

Perfectly nice people with perfectly nice businesses are going bust left, right and centre. Big businesses, small businesses, all sizes of businesses. It is outrageous. It is obscene and a disgrace.

I think I am about to start ranting!

The fundamentals of running a business are not too complicated yet so many people seem to fall foul of what are some universal laws of business: the market is brutally honest; people only buy something if they want to; if they are not listening it is not their fault; sell stuff for more than it costs you!

People set up unbelievably unremarkable businesses in the naive belief that the world will want another similar looking print company/web designer/internet cafe/management consultant. Why do these people think that customers would queue up to buy from their ‘me-too’ businesses?

So, these businesses blame the banks, the accountants, the government, the interest rates. In fact, they blame everyone except themselves for their failure. An interesting common trait of the bankrupts is how their stories and excuses always start with the word “They...”. Why do these people blame everyone else except themselves for their failure? And who is to blame?

All the research on business failure is conclusive. The reason for small business failure is the failings on the part of the owners themselves.

Talk to insolvency practitioners and talk to the researchers. And I quote:
“Two thirds of business failures are caused by management deficiencies” (Birley & Niktari);” Almost 90% of business failures are caused by a poor, inefficient or incompetent management” (SBA); “More than nine out of ten business failures are caused by some weakness in management” (GS May). Do you get the point?

The researchers attribute the failure squarely on the shoulders of the owner: people who can’t think strategically, borrow too much, try to sell products that no-one really wants, don’t know how to sell, employ the wrong people...

Now, I know that you’re saying that this is all just a sleight of hand – the use of words and their meanings – to blame the poor bankrupt when everything has gone wrong for them. I am afraid this is not the case. Who else should you blame?

Running a business is no easy task. That’s why only 20% of start-ups make it to the end of Year Three. Running a business in a recession, it is argued, is even harder (and I am not sure if I agree with that one either!).

So what to do in a recession?  My answer is to take control and to take massive action. Now is the time to stand up and become the leader. Most businesses shy away from making the tough decisions.

And I’d like to offer a little buffet of 10 things you could do to survive the recession. Some of these things may seem counter-intuitive, but I can assure you that these are actually logical options.

Do something worthy of people taking notice of. I don’t mean a simple gimmick but something that people will talk about. One or some of the following items will work for you:

1. Put prices up -
   Frighten away those people only buying on price and get stronger relationships with those looking for value (and willing to pay more).
2. Focus on selling the value you add -
   Talk about benefits. Don’t focus on price.
3. Take away the reasons for people not buying from you -
   Offer a money-back guarantee. Offer payments on results only. Offer a ‘Try Before You Buy’.
4. Sort clients into categories -
   Use the categories gold/silver/bronze and create offerings to match the needs and price points.
5. Sack your bad customers -
   Encourage your less desirable clients to go elsewhere.
6. Use the recession as an excuse to sack that employee who has been driving you mad -
   Look out for the legal implications but I am sure you get what I mean.
7. Call all your suppliers and seek better prices (and maybe a reduced offering) -
   Ask for a price reduction and wait for the reply; they don’t want to lose your trade.
8. Categorise your products so you know which ones give you the best profit - Focus on selling these products.
9. Increase the speed at which you do everything -
   Start earlier, finish later but most importantly work faster and smarter.
10. Make the tough decisions now - Stop faffing about.

That’s just a starter for 10.

about the author

 Robert Craven is a keynote speaker, the author of business best-seller Kick-Start Your Business and runs The Directors’ Centre. for further information contact Robert Craven on 01225 851044, rc@directorscentre.com

Robert Craven©2011

publication details

First published in Start Your Business Magazine - June 2010