An Unbelievable Truth in Small Business
In the early 1990s I was making a living as a business consultant in London.
I worked with several small businesses, mainly in North London, the West End and the City, ranging from a camera shop through to a tele-sales operation. Most of them were large enough to have about a dozen or so employees, but small enough so that the business’s owner or founder still had to be involved on a daily basis.
This kind of business is often regarded as the 'backbone' of a developed country’s economy: small to medium enterprises generate the jobs and therefore the income and trade which keeps any nation alive and functioning.
But in all these cases, almost without exception, the business owner or boss was running into the same problem -a problem which was hindering the company’s expansion, choking production and driving him or her crazy. It didn’t matter what the company did, nor what the economy was doing at the time.
Almost all of them were doing something which was cutting right across any chance of the company getting bigger, interfering with the core of what the business was about and causing them to seek off-the-wall solutions which were going to cost more money or add up to health risks for the executive involved.
At that time, 8 out of every 10 small enterprises in the UK were going out of business within the first 3 years.
And yet the real solution to the problem was and is so simple that I almost felt
guilty taking my fee once I’d suggested it.
And yet it worked every time.
Take for example a small furniture and kitchen design and installation company based in Stoke Newington in North London.
I was called in because the business was in crisis. They owed the tax man over £20,000 and were struggling to keep up with work. Though there were clients and plenty of designs and installations to be done, the rate at which the work was actually getting done was dangerously slow and the company looked like it was going to go under. It was well into a £12,000 overdraft facility and the bank was worried.
As is the case in most of these situations, the business owner and founder was in there every day and night, trying to solve the problem at the expense of his own family life, health and almost his sanity. No matter what he did, how he re- organised things, how much money he borrowed, the bank balance kept on getting lower and the tax man closer. Most of his time was spent, in fact, dealing with creditors asking for money or calling the Inland Revenue to beg for another week or two.
And yet, after spending almost a day there, I could see that his problem was so simple that he would not believe the solution. As a matter of fact, I saw what the situation was within half an hour of arriving on the premises, but stayed for the day in order that he would feel that I had had a proper look around and examined everything professionally. I spoke to key staff and listened to various anecdotes and woes about what was going on on the shop floor and how the nature of the business was such that it was probably doomed to fail.
But I knew what the answer was and wasn’t really listening to them.
Small business owners who get into the sort of position described above usually do one of two things (or both):
1. They borrow more money.
They spend hours, if not days or weeks, putting together a detailed business plan, and then sweat through at least one interview at the bank begging for funds. If they are lucky enough to get the bank’s money, they pay off the most pressing creditors, including the tax people, and breathe a sigh of relief, imagining that they have emerged from a crisis and, due to fast thinking and cleverness, have moved into a new zone of operation.
Far from it. They have succeeded only in delaying the inevitable. Within a year or so, if not less, the bills will have mounted up again but with the added problem of how to pay back the bank loan.
To some extent, this explains the 'boom and bust' theory of the economy as a whole -nations and corporations borrow their way out of disasters while failing to address the core difficulties which led them to the brink of disaster in the first place, which means that they are soon in trouble again.
2. They throw people at it.
If they can, the other thing that business owners often do is that they hire someone to sort it out for them. They get in a secretary or a partner or re-organise the business so that crisis points are covered. This sometimes has an effect because in doing so they accidentally solve the real issue - but more often than not they are still left with the original problem, invisible to them, and before long it has crept up on them again and they are again in crisis.
I never found either approach to be particularly successful.
The Unbelievable Truth
The real answer was visible to me as soon as the small furniture designer showed me into his office.
The big clue was the state of his desk.
It was piled with papers. Some effort had been made, it was certain, to tidy up the forms, invoices, letters, bills, statements, quotes and other sheets into stacks, but more had accumulated and the stacks had drifted until the whole desktop was a mess again.
'Look at this,' he told me exasperatedly, waving a piece of paper at me from the pile. 'There’s a quote here for a £15,000 job in Kentish Town. I could get this done in an hour. But I’m drowning in all this and I have to call the Inland Revenue in an hour!'
He went on to describe various other pressing matters. But again I wasn’t really listening. The solution was already staring at me.
After the due diligence of touring the workshop, speaking to staff, writing down lots of notes and drinking a few cups of tea, I came back to him.
'OK,' I said,'here’s what you do.'
He leaned forward earnestly, hardly daring to hope.
'Take all these papers and make them into a single pile. Put the quotes for new work on top if you like. But put them together, in a basket, and don’t touch them until you are ready to do each one, one at a time, undisturbed, undeflected from your intention. Only pick up a piece of paper when you are fully intent on doing whatever that piece of paper requires of you, and don’t, whatever you do, put it back down and pick it up later.
'Do the work, one piece of paper at a time.'
He looked at me blankly.
'What?' he eventually said.
I explained. In worrying over his desk, picking up a piece of paper, looking at it, thinking about it, then putting it back into the mess of paperwork on his desk, he was at least doubling, if not tripling or quadrupling, his own workload. I estimated that he was totally wasting a third of his time, if not more. What’s more, the really important task of generating the products the business needed to survive and expand was being swallowed up in the 'recycling' of attention taking place on his desk.
He didn’t believe me. But it was that simple, and I spent valuable time convincing him.
Most small businesses are still run by their owner or founder.
That person is still intimately involved with whatever it is that the company produces. And why shouldn’t he or she be? He or she began the business, most probably, because of a dream to produce a particular thing. It was all based on a love and passion for something, whether it was furniture design, cameras, sales or music. The executive who starts a company normally begins with a vision based on a desire to create something.
Of course, as the business grows and takes on people, the founder doesn’t want to let go. He or she wants to be right in there, on the shop floor, doing whatever it takes to get the products out. It is usually with great reluctance and difficulty that this person moves on, withdrawing grudgingly in most cases into an office to deal with things like administration, tax, legal affairs, public relations and so on.
Boring for most. Not what the business was started for.
The assumption is that the small business owner wants to make money. That is part of it, but the deeper truth is that they want to create something. Which is why they find it enormously difficult, usually, to move off the production line and step back. And at the slightest excuse, they are back on the production line, creating -or trying to.
In every single small business I examined in my career as a consultant, the founder or owner was still in there, drowning in the overload and paperwork generated by the production of whatever it was the company did, nine times out of ten going mad with desperation and a sense of being overwhelmed.
Those with vision, or skill or just luck, managed to get out and give the worst bits to someone else to do, but then they themselves felt jaded, disillusioned, empty -they had effectively given away their dreams.
The real answer was and is so excruciatingly simple that it eludes most. If the work is done, one item at a time, it actually gets done. Customers are happy, money comes in, bills get paid and life actually has a semblance of good order and harmony .
I told the designer to get a basket marked 'In' and to put everything that came into his office into it. Then I told him to set aside time to do each item as it arose.
You’ll be amazed by what happened.
I checked back with him about six weeks later.
He had £20,000 in the bank, had paid off his tax bill and other creditors, and was so busy and happy that he barely had breath for words.
'I’ve got so much work coming in, it’s not funny,' he said. 'Customers are referring their friends and some of these jobs are so big I’m going to have to hire a new team of carpenters and installers.'