Cut to the chase with Alan Glazen #3
THE ONLY QUESTION: HOW YOU WILL FAIL?
After all the ceaseless and often useless conversations with those who are dead-set on starting new businesses, I always end with one question: If you fail, what will be the reason?
There’s a lot of innuendo and nastiness in that question. First, it kind of presumes that you’re on the verge of failure, you ignorant and stubborn fool! Second, it totally presumes that the reason or your imminent failure is right before your eyes.
It’s not hard to discover the reasons behind the failure of new businesses. What they all have in common is that they run out of money.
They didn’t have enough money to start with. They forgot to include paying themselves in their budget projections. They assumed that everyone would give them credit. And they neglected to include loan payback and interest charges to be treated as serious expenses.
They anticipated far more sales than they could ever achieve. They figured that everyone would pay right way, and that those who gave them good and services on credit would be patient.
But, of course, none of that comes true.
When your small business fails, it will always because you ran out of money. You’re like a gambling addict that kept borrowing from the mob. Sooner or later, you can’t pay them, they won’t put up with it any longer, and just to make a point, they’ll bury you.
When companies go out of business, they rarely become part of the statistics about small business failure. That’s because when they run out of money, they don’t announce it. Instead, they go get jobs. The company doesn’t really fold; it just ceases to operate. So, the data about business failure is by nature, enormously understated.
In fact, most new companies barely officially exist to begin with. Basically, you lose your job, you can’t handle the disgrace so you tell everyone you’ve started your own business. It’s not really much of a business. It’s name usually ends with “and associates.” As soon as you get a new job, with absolutely no reporting or fanfare, it’s all over.
So, running out of money is reason #1. Getting a job is usually reason #2. And there are tons of other reasons, always starting with the anticipation of more sales than you’ll ever enjoy. On the way toward bankruptcy, you commit all kinds of ridiculous actions.
The first is thinking that you’ll learn as you go. You’ve never hired anyone, never supervised anyone. You’ve never dealt with employee benefits, or collections, or insurance companies.
I always ask: would you hire yourself to do any of the absolutely necessary roles your success will require?
So, why did your company fail if in the future it actually does? Mostly because you had the wrong people doing the work and you didn’t have enough money to fund the journey toward success. The “wrong people” started with you.
Why am I being so negative and depressing? Because I want you to succeed. I hate failure, even it’s only yours. On the other hand, failure is very entertaining. More people enjoy failure stories than success stories!
Here’s how to avoid becoming one of those: think small. Think about how you’ll get by with small money, small staff, small sales. Don’t think big. I never want to know how well a new company might be able to do. I want to know how badly they can do and still survive.
If you require more success than is likely, you have no chance. If you need luck, good fortune he blessings of the Lord to get by, you almost for sure won’t.
Finally, if you figure out why you might succeed, at least take the effort to figure out why you might fail. The answers are easy to come by. You’ll fail either because you don’t have enough money or you don’t have enough ability. If you go ahead anyway, with both of these weights on your shoulders, don’t get depressed when the roof caves in. You were a willing victim.
