We often spend a lot of time worrying about what our competitors are doing. We genuinely think that our competitors represent the greatest risk to our companies.
When we look at our P & L we think sales are too low, costs are too high, and profit is elusive so we blame competitors, the market conditions, globalization, and other external factors.
What if I told you that the largest threat to your business was ALWAYS internal?
Over the years working for large corporations and small entrepreneurial start-ups I see the same scenarios unfolding over and over again. As I tell you the following stories I hope that I can inspire you to look inward and identify the self-imposed limits you have placed on yourself. Then I want you to get out of your own way and profit!
Management wins, company loses
Recently, I lost a deal and when I had the final meeting with the buyer I asked why they didn’t go ahead with the deal despite the product and price being better. The answer was a little shocking and very sad.
The buyer was in his current role because he had accepted the job on a 3-month interim basis when his predecessor left unexpectedly. This loyal employee really stepped up to the plate to help the company out in a tough situation. The interim designation meant that he was not rewarded financially for his additional effort.
The issue is that was 6-months ago. When the buyer asked his manager if he was going to be given the position on a permanent basis (receiving a raise for the extra responsibility) the manager asked the buyer to extend the 3-month interim position to 18-months!
To add insult to injury the manager was being rewarded for keeping salary costs low. The buyer was understandably frustrated with the situation and in a nutshell “felt no motivation to save the company money”.
The Lesson: Do right by your employees!
Everything we do as individuals and as a company has the potential to have negative unintended consequences. This manager was doing their job and keeping salaries low and was being rewarded for it. How they were accomplishing this was by destroying morale and victimizing a formerly dedicated employee. Any upfront savings on salary was being dwarfed by losses out the back end.
Entrepreneurs with small businesses often fall into the trap of setting things up in a way that matches their personal preference but this often hurts them financially.
“In business, there is a correct way to do something and there is every other way” – Jamie Irvine
An entrepreneur I know had set up a remuneration program for their workers to avoid having employees. It was costing them an additional 20% gross profit and often caused confusion and frustration for the workers.
To make matters worse because many of the workers were set up as independent businesses that sub-contracted from them they were, in essence, a factory that produced competitors.
Over and over again for nearly 20 years this entrepreneur had found young talented people, taught them the business, showed them how to set up their own sole proprietorship, and within a few months, they would have to start the whole process over again because the sub-contractor would eventually find their own customers.
Had this entrepreneur invested all of that time and effort into building his own business up and hiring employees he would own the largest business of its kind in North America by now and the business would be generating millions of dollars in revenue.
The Lesson: Do things the correct way or don’t do them at all!
In the example above had the entrepreneur just gone about doing things on his own and never taught anyone else the business at least he wouldn’t have created new competitors. So in this case doing nothing would have been preferable to what he was doing.
This entrepreneur actually, in the end, chose another path which leads me to my next story.
Don’t Beat Yourself Up
We all make mistakes. Sometimes we make the same mistakes for extended periods of time.
When we finally realize that we need to make changes and get out of our own way what should we do?
The entrepreneur in the proceeding story realized that he needed to do things differently. He didn’t beat himself up about the past but rather focused on the future.
This entrepreneur bought one of the companies he had helped start several years before. Integrated the systems of the two companies and added to the management team two people that had offsetting skills, knowledge, and insight into how to take the business to the next level.
The Lesson: Look to the future and surround yourself with the best people.
Don’t get bogged down with regret about the past, look to the future and take the correct action. 9 times out of 10 getting out of your own way involves finding someone who can do it better! The ultra-successful surround themselves with the best people they can find and so can you.
If you want to increase sales, decrease costs, improve profitability, morale, and generally be more successful in business then I encourage you to stop looking externally and start looking internally.
The solution to our problems is so often directly connected to us and the things we are doing. Get out of your own way and PROFIT!
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