Philip E. Elworth, B2B CFO®
Providing CFO services in Palatine, IL and surrounding areas

The Ten Commandments for Business Failure In Chicago

Commandments 5-10

By Philip Elworth

I recently read an interesting book by Donald Keough, who was chairman of Coca Cola Company during the introduction of New Coke.  He has some intriguing insights into business failure.  What I find most interesting is the number of companies I have seen who are following at least some of these commandments.  This is the second part of this story and covers commandments 6-10.

#5 Play the Game Close to the Foul Line.  I was recently in a meeting with a banker on a turnaround situation.  The banker stated that as long as we played straight they would work with us.  Play games however and they are through.  This is tough language when a business is on the line but what better way to fail than to play games.  You need to understand that your employees see this behavior and it is often observed by customers and vendors as well.  The bottom line is that trust is still the glue that holds things together.  I have never lost sleep over honest behavior.

#6-Don’ take time to think.  The term in-box shock or information overload applies here.  It is well documented that we are bombarded with information all day long.  Is it any wonder we can’t sit back and ponder what is going on around us?  I was recently at a seminar where the speaker, an expert on organization, was showing his empty e-mail inbox.  His point is that the only thing that should be in your inbox are specific issues you need to follow up on.  A cluttered in-box is as bad as a cluttered desk.  It leads to a cluttered mind and a cluttered mind cannot see the real issues before it.  You must take the time to think through the issues that are before you.

#7-Put all your faith in experts and outside consultants.  Ouch, this one hurt since being an outside advisor is what I do.  However his words are valid.  I give my clients advice, but I also try and show them alternatives.  There is rarely only one way to accomplish something.  As a business owner you must always apply the advice you receive against what you know to be true.  When dealing with consultants always separate the presentation from the presenter; beware of flattery.

#8-Love your bureaucracy.  Remember that administration is there to facilitate work being accomplished, not to run the show.  I am a strong believer in outsourcing.  If a particular function is not core to your business and by its nature a differentiator, then look to outsource it to some one who knows what they are doing.  There is a tendency for noncritical functions to try and make themselves more important by controlling information and workflow, often to the detriment of the organization as a whole.

#9-Send mixed messages.  Have you ever requested something be done by one of your employees only to find out it was not completed?  What did you do?  It is always the job of the communicator to make sure the message is received and understood.  Are you doing this each time you communicate?  If so and you are not being heard, than apply accountability to the communication.  But be prepared to follow through on the consequences or you are sending a mixed message.

#10-Be afraid of the future.  To stop taking risks is in itself a major risk.  I refer back to the first commandment.  Every business must keep moving forward or risk a decline.  I do not know of any company that is growing without trying something new.  You do not have to bet the farm, just keep looking for ideas that will pay off over time.  Ball games are won with singles and doubles.  You don’t need to go for the fence on every deal.

If you would like help with applying these points to your business I am available and can be reached at pelworth@b2bcfo.com.

Is Your Business Prepared for a Catastrophe?
By Philip Elworth

According to the Small Business Administration, 25% of businesses that close because of a disaster never reopen; 80% of businesses that do not recover within one month are likely to go out of business.

“It will never happen to me” is not an answer. The fact is- it can happen to you because you cannot control the total environment. I recently attended a panel discussion on a local charity re-sale shop that just a few months ago had a fire that totally destroyed the building that housed their shop. The fire was caused by a major wind storm that dropped a power line on their building, which then caught fire. Nothing could have done to stop this catastrophe.

There are three major areas of disasters to consider:
• Natural hazards; fires, floods, wind storms, tornados, snow, rain; but this could also include an outbreak of H1N1 that knocks out half your production staff.
• Technology hazards: Loss of critical data or computer; being hacked; losing a key piece of production machinery.
• Terrorism: explosions or attacks, may not affect your business directly, but what about transportation of employees, supply interruption, both materials in and out of your area? What about a disgruntled worker seeking revenge? A theft of cash or other key assets?
• Other major business risks: Loss of key customer; loss of key supplier; loss of key employee.

I challenge you to take this Business-Ready Quiz:
• Have you determined how long your company can afford to be closed before the business is critically affected?
• Have you developed, documented and tested a comprehensive business continuity plan for facilities, employees, processes, systems, data and networks that addresses recovery and restoration, as well as internet communications?
• Have you determined how your business will operate should key business partners and vendors be affected by disruption or disaster?
• Have you negotiated vendor contracts or lease agreements necessary to acquire equipment and services in the event of a significant disruption or disaster?
• Are your employees trained to know how to respond to an emergency/disaster where you may have little or no warning before it occurs?

This quiz was developed by the small business development center at Harper College in Illinois in conjunction with the Small Business Administration. If you answered no to any of these questions then you are not ready to face a disaster. If your business is an Illinois business you can start developing a business continuation plan at no cost to you. Contact me at pelworth@b2bcfo.com and I would be happy to make this connection for you which is funded by our tax dollars through Harper College and the SBA.

Business continuity is the key: identify the risks then determine a plan to stay in business. Ask yourself what you would do if you could not get to your office? What core business functions do your customers rely on that must continue without interruption? Have a “go-box”, offsite storage of key plans documents, data, pictures and processes that you need to stay in business. Lack of planning is not an option when your business is being affected by forces outside of your control. Take charge now.