Honesty is the best policy
In the early stages of a new business, it's important to be open and honest with partners and investors about progress and problems.
3 April 2008 | 0
THE PROBLEM: I opened my own business just under two years ago and technically speaking everything has been been going well. The business has been growing each month and going more or less according to the business plan.
However, it has been a hard struggle since almost the first month. I thought I had planned everything very well but thanks to some bad advice at the start I’ve had cash flow problems all along and in spite of being able to grow, I feel like the debts are just mounting and making every little unexpected hiccough ever harder to handle.
It has been a very stressful two years and what’s worse, I try to keep as much of it from the investors as possible. I do believe I have a good business here but I’m starting to feel a bit jaded.
Well done on keeping your business success to date. My clients always seem to succeed when they have a business plan. It does not matter how simple the plan is, it is the concept of having your own ‘instruction manual’ that really helps in the first couple of years in business.
Running a business is like driving down the M50. It’s a straight road most of the way, a few road-works here and there and maybe one or two wrong turns off a slip road. The road works are the small problems, such as cash flow, the slip roads are when you go off course. Thankfully it is possible to get back on the road and that is where you are heading. The exhaustion, I expect, is a direct result of the stress and anxiety that running a business with cash flow problems causes.
If you were sitting beside me in a coaching session, I would talk you through the point that I made in last month’s issue of Shelflife, ‘Your Financial Reservoir’, in other words, money. I will repeat this for you, in a slightly different way, because you are now two years into your business. The concept, however, is the same. It is very difficult to have a successful business when you have limited access to money. It is not impossible, just more difficult. When you spend your time and energy worrying about money and cash flow, it causes stress and exhaustion.
The reality is that you have suffered cash flow problems from the very start. What I do not know from your e-mail is how severe the cash-flow problems are and whether or not you have a fully viable business at this stage. I strongly suggest that you get advice from an expert so that you can start making business decisions based on your business plan and projections and not ‘lack of money’. One of my own personal mission statements is ‘work at what you play at’.
I avoid tasks that do not come naturally to me, tasks such as book-keeping, IT etc. I always call on a specialist to carry out these functions because, in the long run, I know that I am wasting my valuable time when I do not focus on my areas of strength. Find a good adviser. Get recommendations from friends, ex-colleagues or family members, or someone you can trust to help you work out your cash-flow problems. Free up your mind to focus on business growth.
Explore your options
You mention that you are keeping information from your investors. I also feel you are keeping information from yourself. It’s time to write down your thoughts. When you look further down the road (your M50), what do you see? I expect you have a range of answers from worst-case scenario to real success.
Focus on this range of options using my Success Grid. Take your time to complete the grid. I am suggesting six headings based on the information you provided in your e-mail. You may want to explore other areas.
|Worst case||Can live with it||Real Success|
|Future of Business|
|Staff and Advisors|
The Success Grid will allow you to sort out your negative and positive thoughts. If you are able to overcome the worst-case scenario at this stage, and focus on the ‘Can live with it’, the successful scenario will happen a lot faster than you can imagine.
Unfortunately the unsuccessful ‘toxic’ thoughts are what stop so many business people from moving forward in a positive way.
Finally, I feel it would be useful for you to focus on your values. Your values are part of your instruction manual.
When we do not live according to our values, life does not ‘feel’ right and decisions are based on what we think we ‘should’ do as opposed to what is right. I have set out below a list of the most common values:
Strength (physical & emotional)
Circle the values that are most relevant to you as a person, a business owner. Take a look at what you have circled. Are you living within your values? I expect not and that is one of the reasons for the stress and exhaustion. A value that is chosen by nearly every business person I know is ‘honesty’. This may be one you have chosen. If it is, its time to get appropriate advice and then talk to your investors. What do they want to know?
These actions will allow you to reach your destiny of success a lot quicker than you think. Good luck with your success.
Meet the Coach
Eibhlin Johnston is the managing director of thinkCoaching, which works with business teams, executives, managers and self-employed professionals to help them discover their core strengths and create bottom line results. Her specialty area is talent retention of individual high performers.
Eibhlin has over 17 years experience in financial services and uses her past expertise to help business-owners. For more information visit www.thinkCoaching.ie or call 353 87 8583564.