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Too small to fail

Written by: Seth Godin

Article Overview: One secret of being a large financial institution is that you can take huge risks because you're too big to fail. If you hit craps and lose it all, don't worry, because you'll get bailed out.

Too small to fail

One secret of being a large financial institution is that you can take huge risks because you're too big to fail. If you hit craps and lose it all, don't worry, because you'll get bailed out.
One secret of 'small is the new big' thinking is that you won't fail and you can't fail and you don't need to worry about a bailout. Not because you're small in headcount or assets, but because you act small.

A small acting bank would never have invested in tens of thousands of loans that they hadn't looked at. And a small acting startup wouldn't hire dozens of people before they had a business model... and then have to lay off a third of them just because their VC firm showed them a scary PowerPoint.
I've always been frightened by big-firm accounting. The sort of financial legerdemain in which skilled accountants work hard to make the numbers look the way the CEO wants, instead of making them clear. Cash accounting run on a simple bookkeeping system is the small way to do it... even if your company is huge. That's because sooner or later, management has to know what's actually happening as opposed to what they can pretend is happening.

Big-thinking companies lose customers all the time because big-thinking companies isolate the decision makers from the outside world. Angry customers who are leaving don't get heard... that news is heard by the poor shlub reading a script at the call center. 90% of the angry customer mail that people forward to me (I have enough for a lifetime, thanks) is angry because the (former) customer is tired of being ignored.

If you act small and think big, you are too small to fail. You won't need a bailout because your business makes sense each and every day. You won't need a bailout because your flat organization (no matter how large it is) knows about problems long before they're too big to deal with.

The media and the tech blogs glamorize businesses that act big. They write about the big checks VCs hand out and they lionize the organizations that make a splash. The untold story is in the organizations that are close to the customer, close to the product and close to each other. Thinking small always pays off.

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Article Tags: accountants, angry customer, angry customers, assets, bailout, bookkeeping system, business model, call center, cash accounting, customer mail, decision makers, dozens, financial institution, flat organization, hadn, headcount, legerdemain, shlub, tens of thousands, vc firm



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How can you help dreamers or those with no patience? - Often times, you'll come across aspiring entrepreneurs who are either "dreamers" (i.e. people who talk a lot about starting a small business, but never take action) or those with no patience (i.e. people who have an idea and run out to do it without thinking and then fail shortly afterwards) How can you help small business dreamers or those with no patience?
What is your hit ratio? - Like most entrepreneurs I have more ideas for where I want to take my business than I can handle. I believe in the "fail early, fail often" philosophy and try to find small ways to get started on a project to see if it has any legs. I would estimate that for every 50 things I try, most of them don't have an impact for me, 10 of them have a slightly positive impact, and 1 hits it really big. Some of my big wins over the past few years have been: * Learning the ins and outs of search engine optimization to drive traffic * Putting up and optimizing Google AdSense ads to monetize the website * Deciding to be the leader in profiling famous entrepreneurs online * Recruiting outside authors to help contribute to the website content (now have over 25,000 pages) * Creating the entrepreneur forums * Bringing on staff to help cope with the daily amount of work required to keep things running smoothly What is your hit ratio and some of your big wins?
Re: Is A Business Plan A Waste Of Time? - We should have a poll here - who has a business plan and who doesn't. I think I contributed to this thread when it first started, but I agree with our recent contributors to the thread. A Business plan is simply a must. If you fail to plan... you plan to fail.
Willing to Fail Your Way to Success - Entrepreneurs in my opinion, must be willing to fail. (This is that risk-taking factor quoted in the other post). If you aren't willing to fail then you don't take risks and if you don't take risks you do I like to call (I am qouting an awesome book called Play to Win!) 'Playing Not to Lose' instead of 'Playing to Win'. When you Play to Win you must risks. Risks are how you build a business and innovate.
Re: What is your hit ratio? - [quote="Evan":2jfsvw6z]Like most entrepreneurs I have more ideas for where I want to take my business than I can handle. I believe in the "fail early, fail often" philosophy and try to find small ways to get started on a project to see if it has any legs. I would estimate that for every 50 things I try, most of them don't have an impact for me, 10 of them have a slightly positive impact, and 1 hits it really big. Some of my big wins over the past few years have been: * Learning the ins and outs of search engine optimization to drive traffic * Putting up and optimizing Google AdSense ads to monetize the website * Deciding to be the leader in profiling famous entrepreneurs online * Recruiting outside authors to help contribute to the website content (now have over 25,000 pages) * Creating the entrepreneur forums * Bringing on staff to help cope with the daily amount of work required to keep things running smoothly What is your hit ratio and some of your big wins?[/quote:2jfsvw6z] That's pretty impressive Evan! When I was younger it was probably 1/5 things i would try would work out. I would come up with 100 different ideas but only act on some of them. My biggest issue was not following all the way through, or having to much going on at one time. I read a quote today that fits with this idea. “A minute's success pays the failure of years.” - Robert Browning


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