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Read me like a book by starting at the beginning

Two Steps Forward One Step Back

Date - 15 January 2016/ Category - Facts Of Life
Facts of life

If you read the autobiographies of the rich and famous you could be forgiven for thinking that they never made a mistake.

History is written by the victor and as the psychopath test taught me, it’s written with rose tinted glasses too.

All too often fiction is passed off as fact, or at the very least an exaggerated; it just sells more books.

What most people fail to tell you then is that most failures in business are frequent every day events not just a few pages at the back of a book.

For most businesses, daily life revolves around balancing failures and successes. If you’re successes outweigh the failures then generally you’ll succeed in the end.

The trick is to reduce the failures to a minimum and fail less as you get bigger; the problem is as you grow the cost of failures also tends to increase.

On a daily basis then, you’ll make sales and deliver your services and somewhere in between something will probably go wrong, but that isn’t the end of it.

The single biggest issue for small and growing businesses is getting paid, and more often than not your debtors will pay late, and some will never pay at all. Taking a knock to your cash flow is a pretty big step back.

It seems to be an unwritten fact that small businesses are used as banks by one another; stretch out the time it takes to pay and you can stretch out your cash flow too.

Have you ever heard of someone walking into a supermarket and haggling when they get told the total bill? So why then is it acceptable to walk into a small business and haggle over the price?

Logic would dictate that the big supermarket could afford to haggle more than the small business but it just doesn’t happen.

Something similar happens when small businesses supply their services to other businesses. You might think that if your invoice says 7 days payment, that you’ll get paid on the 7th day but you won’t.

You’ll be lucky to get paid in 14 days and around day 10 the excuses will start coming out.

• We only process payments on Fridays
• The director is out of the office and can’t sign it off
• It’s in the post
• My customer hasn’t paid me

The above are all common excuses that slow down the payment process but they aren’t the worst you can get. If a customer wants to be really awkward they’ll wait till the payment terms expire and then start to haggle.

They will find a fault that isn’t there, or make you an offer of say 90% of the value to get paid. They know that it will cost you more than the 10% to take it back and fix it.

Dealing with problems like this, along with dealing with success can really take it out of you. Advice books will tell you to employ people to deal with these problems so that you can “work on, not in your business”; but lines like that were written by people who don’t know what it’s really like to be small.

I’ve been in this position before. When you’re starting out you don’t have the money to employ people to do the hard stuff so you can work on your business. You’re running your business because you’re the one that can think on your feet and people like you cost a lot of money!

Yet I would wager good money on you being the lowest paid person in your office.

So how can you overcome the problem of taking a step back for every two you take forward?

You have to set out your stall at the beginning. You’ll be afraid to not give your customers credit terms but until they have earnt your trust you shouldn’t do it, until they learn how valuable they are they will treat them like they mean nothing.

You’re going to have to learn quickly to reduce the impact of your two steps back, and make sure you come up with efficient processes to deal with them.

The reason most people get caught up in their businesses is because they need to problem solve, but in business the same problems crop up time and time again.

Once you’ve crossed one problem for the first time, you need to solve it and make sure your team know how to deal with it in future so they don’t need to think about a solution.

Suffer enough setbacks and you’ll build up a hand book of solutions your team can follow that will enable you to work on your business, but the fact remains, when you start out, you’re going to have to suffer setbacks in order to learn of to succeed in future.

Chapter Summary:

• Failure is an everyday thing
• Suffer less failures than successes and you’ll grow
• You won’t get paid on time

Read our next blog post “Build it and they won’t come”.