I was having a beer with a former Scout of mine last night at a local brew pub. He works as a pyro-technician full-time and he’s been running his own little business for the last ten years. As a kid he was fascinated with fire, and had set up a forge in his backyard when he was sixteen so that he could make swords. You can imagine what his mother had to say about that.
Currently he owns and runs his own storefront selling swords, armour, and chain-mail to the medieval re-creationist market. His store, Dark Age Creations, is doing well and he’s plowing all the profits back into the business.
Turns out he’s a good salesman and understands how to make money. He has no problem calling others when they don’t do what they said they were going to do, and he surrounds himself with people who support what he’s doing. In five years he wants to sit back and collect dividend cheques while the store runs itself. Not a bad plan really. Better than many I’ve heard.
Pay Attention to the Numbers
Problem is he needs an accountant, but he hasn’t done anything about it. He doesn’t even know what his tax liability is going to be at the end of the year! I pointed out the irony (between holding others accountable and not himself), gave him a figurative smack upside his head, and told him to get straightened out now. It was like being back in the days when he wasn’t taller than me.
He’s been lucky so far, but no business can base its success on the hope of an unbroken string of charm and good luck. Even when we’re doing what we love and living our passion the tax-man and the landlord are always ready to step in when they think they’re not going to get theirs. It only takes one “bad quarter” to put you out of business.
Sense of Urgency
So I told him the story of one of my former clients that allowed their CFO six months to report on the year-end. They were unable or unwilling to do what was necessary to get things moving. When the year-end was finally ready, they had lost half a million dollars on the year – on $15M of revenue. Not something that a company that size can easily swallow.
It was a big lesson for me – all the vision, people and customer focus in the world is useless if you’re not on top of the cash. Yes, you need a higher purpose – other than just making money – to inspire and motivate. One that engages your clients, employees, and shareholders. All the enduring, profitable companies have one. That’s not going to make you feel better when you’re emptying your desk because your company’s gone bust.
Face Reality Quickly and Constantly
I lost that client, but I learned a valuable lesson that day. Face reality, and face it quickly. Business has enough uncertainty and risk without ignoring what is right in front of us. We can’t control everything, but we’d better be paying attention to what we can control.
Put another way, as I said it to him: “Pay attention to the freaking numbers. Don’t be those other guys who didn’t know they’d lost half a million dollars.”
Relentlessly face race reality. Be skeptical. Don’t take hand-waving or indefinite answers. Have the difficult conversations when you need to, and while you’re holding others accountable, hold yourself accountable too.