A Lesson From the Recession

Reversing the slippery slope towards dull mediocrity: By Larry Galler

The new company bubbled with enthusiasm. The founders were ambitious, energetic, and hopeful. They gave every customer friendly service, followed up after the sale, responded promptly when there was a rare problem, and did everything in a high quality, high value manner. Their opening energy helped the business quickly get above the break-even point and started making a modest profit because of the founders constant personal involvement.

But, as the business matured, that burst of energy at the opening dissipated and, unfortunately, couldn't be sustained. While the modest profit continued, the intense concentration and energy the owners had invested in the business began to wane and, little by little, the business started down the slippery slope towards mediocrity. It seemed as if they were just going through the motions, expending the least possible amount of energy to satisfy customers, never able to inspire themselves to thrill their customers or motivate their staff to a higher purpose.

They hung on, growing if the economy was good or their service was needed. They stayed on that plateau for a few years, complaining about the state of their business, their staff, and just about everything except their own attitude and personal lack of enthusiasm.

One day the founders went out to lunch together. They commiserated about the state of affairs, became nostalgic for the early days when, every morning, they almost ran from the parking lot to the front door filled with creative energy. One of them mumbled, "Maybe we have to do something to reinvigorate ourselves and our business or we'll ultimately fail."

They realized that once their initial goal of reaching sustainable sales volume had been reached, they never created new goals, didn't have any other challenges to inspire themselves. So, on a napkin, they wrote out three goals, attainable with effort: a sales goal, an administrative goal, and a maintenance goal and a reward they could win if they reached them. That was the start of renewed concentration, energy, and growth towards reversing the slide into mediocrity and probably into failure. Today their trajectory, for the first time since they reached break-even, is climbing towards prosperity.

Send a comment or question to Larry: Larry@larrygaller.com

Musings

According to the Family Business Institute, the Bureau of Labor Statistics says about 4 million out of 24 million closely held businesses have shut their doors during recession. That's about 17% of all small businesses who are now OUT OF BUSINESS!

Some of this, of course, is due to natural attrition - even in the best of times some businesses fail for various reason. But this is different. Drive through the downtown section and strip centers of most towns and you will see a higher than average number of "for rent" signs in windows of dark stores. Look at warehouse parks and office building and you will see more signs that indicate failed businesses in spaces that were formerly bustling businesses. The recession has had dire effect on many small businesses.

Some of these businesses are in industries that have really been hammered and even the best managed companies in those industries have truly suffered. Some other businesses had bad timing issues, expanding and taking on debt at the peak of the expansion wave and, when things tightened up, were buried under that debt.

But I'd be willing to wager that the bulk of the failed businesses were ones that were marginal or badly managed before the recession - little to no planning, few financial controls, internal strife, indifferent customer service, and a reactive instead of a proactive method of doing business.

While the business news seems to be brightening hopefully, we still have a long way to go before we get back to "business as usual." But, as the economy recovers, the surviving businesses, instead of giving themselves congratulatory "high-fives" should be looking proactively to the future and discovering ways to become better at all the tasks that separate the mediocre businesses from the good ones and the good ones from the great businesses and put into action steps to make themselves better, more competitive, and more sustainable so your business does not become a statistic when the economy tanks again.