In life, time is said to be a great healer. For small businesses it can be a silent killer.
The recent floods gave this an interesting perspective. My house is by the Thames and we were informed by news broadcasts that a huge volume of water was making its way downstream towards us – “could be as bad as 1947”, “expected peak is Tuesday morning”, “Joe has moved his car to Bill’s house” and all sorts of other, sometimes conflicting information, was available to us.
It occurred to me that, in waiting for the flood to arrive, my sense of anticipation mixed with adrenaline was exactly like getting a business going. You have a small amount of time to get your plan in order then you have to execute it brilliantly. You don’t know exactly what is going to happen, or when. For many would-be entrepreneurs the temptation is to weigh up the odds (“it’ll never be as bad as 1947” or “that big order is bound to turn up”) and do too little too late. Moreover the consequences of doing nothing can be catastrophic, whereas over-reacting has no downside other than a bit of time and effort, and means that you are better prepared for the next time.
In the period before the flood strikes, there is a strange calm – nothing you do has an immediate consequence – the water doesn’t appear immediately after you got the sandbags in place – so the sense of urgency is very difficult to maintain. As a result, time can tick on and suddenly the disaster is upon you and you’re only half prepared. By the same token, it is amazing what you can achieve in a short time when you have a real, serious deadline to meet – I shifted ¼ tonne of sandbags, cleared my garage, moved belongings to safety, made up some shuttering, oh and booked a couple of sales meetings, had a customer review meeting and calls with staff in less than a day!
It’s the same with a start-up, or indeed in a business in trouble. There is a finite amount of cash to invest in getting new customers, perfecting the product and bringing the right people in. There will be lots of information, lists and versions of forecasts, making it very difficult to see what’s really happening. The impending disaster is the moment the cash runs out, which can initially seem a very long time away. The trouble is, unless you set deadlines and milestones and actually recognise them, no bells or whistles go off each time you hit a milestone, and most importantly, there doesn’t appear to be any immediate consequence of not hitting them.
And it’s the latter point that means elapsed time is always much longer than expected for the vast majority of early stage businesses. It’s also why many DIY turnarounds fail because too little is done too late. If there were nasty consequences each time the team failed to hit a deadline, they’d be more likely to succeed and hit the next one, and the one after that.
Entrepreneurship guru Robert Craven talks about the “valley of death” – the “investment” period between being a profitable sole-trader and having about twenty employees. “You simply have to run as fast as possible to get there, otherwise you go bust”, he says.
Back to the sense of urgency; it’s very easy to be “heads down” on the tasks in hand, forget the important longer term goals, and end up a victim of the silent killer – time.
So how do you keep your head up and run the business every day as though your life depended on it?
Here are my top six business “sandbags” to get in place before the flood arrives:
- Have a clearly communicated plan with real milestones
- Make deadlines and milestones matter – celebrate success, learn from failure and crack on
- Employ a finance director – then you have objective forecast information; it’s too easy to duck impending problems otherwise, and they’ll tell you what to look at and what’s irrelevant
- Monitor cashflow closely – how much cash (= time) have you got in reserve? Your FD should pester you constantly
- Get a non-executive director – all successful entrepreneurs have them, love them and hate them – they make you look far enough ahead, whilst avoiding tripping over your feet
- Hold regular Board meetings away from the business – how close are you to plan, what actions are needed by whom and by when and ensure that actions are carried out
Ignore them at your peril – get them in place and cash should be the only flood you’ll have coming in.