As summer gets into full swing, let’s take a look at our business owners, Fred Jr. and Stan, as the heat gets turned up for each of them. Challenges that lurked under their radar have surfaced as immediate crises for their companies, causing distress and uncertainty.
All good businesses have periods of distress that can be humbling for the business owner. What takes a good business toward that next step of being a great business is how a business owner deals with those periods of change.
What challenges have you faced with your business? How did you react to the stress of the situations?
Whether a business owner faces adversity with narrow frustration or open-minded humility can be the difference between long-term success and an expensive failed endeavor.
Any time of great change can present opportunities that test a leader’s ability — and every great leader has trusted advisors behind them.
A Tale of Two Businesses: Part 3
Fred’s Luxury Auto Services
As Fred Jr. has been juggling his operations and trying to implement a new bookkeeping system, four out of his 20 mechanics gave notice they will be leaving. Fred noticed customers are leaving as well, as revenue is dropping even over the short time he’s been in charge.
The loss of several members of his skilled workforce hits Fred Jr. like a truck, as he realizes he doesn’t know how to go about recruiting certified mechanics. Meanwhile, he is still in the middle of reorganizing as his father’s estate moves slowly through probate. Soon, more bills will come due and he fears there won’t be enough liquid assets to pay everything.
He isn’t sure where to turn, so he visits his family attorney to inquire about how quickly he can get into his father’s accounts. After Fred Jr. explains the various difficulties he is facing at the garage, his attorney points out that getting access to his inheritance will only be a temporary fix — he needs to do some work in order to put the business back on track and get its value growing.
“Let me set up a meeting,” his attorney offers. “I work with some awesome advisors for anyone running a business.”
Stan’s Auto Repair
Stan has been spending so much time working that he didn’t realize how overdue his home bills had become — until his wife calls to say the power has been shut off. She gives Stan a clear ultimatum: find a way to make the business profitable and stop spending all his time at the garage, or she will leave.
On the way into work the next day, Stan stops at the auto parts supplier he’s been using for years and gets some news from the owner of the shop. After thanking him for his business, she announces that she’s signed the sales paperwork and next week he’ll meet the shop’s new owner. She’s excited about retiring early and has plans for a cruise and more time with her family.
Stan is speechless. He is a small business owner, just like her, yet they are worlds apart. Maybe he’s in the wrong line of work, as retirement did not seem like it would ever be within his reach. He tells her he’s happy for her but also feels like he’s failing.
“Well it’s not like I hit the lottery overnight,” she explains. “Years of strategic planning and follow through went into growing this business and selling it at the right time, to the right buyer. I know all about auto parts, but I had help on the business side of things. You should talk to my advisor, hold on.”
She pulls out her phone and sends a quick email, introducing Stan to her advisors and suggesting they meet. Stan leaves the warehouse with his parts — and a little bit of hope.
Challenges like the ones facing Fred Jr. and Stan can, and do, crop up for all business owners. We have categorized “The Five D’s” that can seriously endanger a business:
And the unofficial sixth D that can scuttle a business is “Don’t want to do it anymore,” which can arise as a side-effect of any of the crises above, or all on its own.
When will your business face any of these? How soon will you see any of them as a real threat on the horizon — or might one of these dangers come out of left field unexpectedly?
Fred Jr. was handed quite a few problems because his father did not plan for what would happen to the business in the event of his death, and he has been having disagreements that resulted in employees leaving, as well as the distress of taking over unexpectedly and going through a long probate process. Stan, meanwhile, is suffering much distress, both financially and emotionally, with the threat of divorce adding to his concerns.
Each business looks different, with its own strengths and challenges, and each business owner has specific goals. One thing Fred Jr. and Stan have in common, though, is that neither have given much thought to defining those goals and what sort of timeline they want to implement in working toward them, as right now both are in crisis mode and simply trying to remain viable.
Once things stabilize, Fred may decide his goal is to maximize the value in his business and then find a buyer to take over. Stan might eventually want to oversee a team of mechanics at a larger space, or even expand to more locations. As long as their focus is occupied with staying afloat, however, it’s impossible to think that far ahead.
No one likes facing uncertainty alone, without a plan. For many clients, the peace of mind that comes from regularly meeting with a trusted business advisor is one of the most important benefits. It’s often the first time they don’t feel alone in the management and planning of their business. With a partner, worries can be replaced with strategy and trackable progress.
All our work is done with the guiding purpose of helping your business reach the next level, so that you can reach your personal financial goals and achieve lasting stability for yourself and your family.