What’s the worst word in Business? FAILURE!

What’s the worst word in Business?

FAILURE!

No one likes failure or those who have failed. Business is supposed to be about success, making profits, achieving objectives, going places and hopefully having fun!

But being in business also means taking risks and making judgements that can and sometimes do go wrong. And hitting that brick wall of failure, sometimes when you least expect it; can be very painful both financially and personally.

This was brought home to me when I heard that one of my clients had gone into receivership. I immediately called the client and left a message asking him to give me a call. We had spoken only the week before and at that point everything seemed to be going according to plan. That is according to the recovery plan he and his team with my assistance had constructed earlier in the year. I eventually caught up with him and it was not a pleasant phone call.

My client has in the past been very successful having built up businesses and then sold them for 8 figure sums (+£10Mn). Having taken time off he went into a new venture with his past experience and well-proven skills in a similar related market. But the plans he had did not work; the market did not respond to his model as he expected. This was very painful and meant him having to commit more of his own cash (and his silent partners too) with an acceptance for a need to change. I came in at the latter point of this process and helped get clarity on the way forward for him and his team. But cash was tight and so my time was constrained. I kept in touch on the phone and the revised sales and organisation plans seemed to be working well but what was working against him was hidden.

My client had an institutional investor who obviously became nervous during the last few months. The problems on the stock market currently could not have helped. My client had relied on his financial accountant to manage the relationship and had stepped back from meeting them. The accountant obviously failed to see the signs and suddenly the Institution called in the debt with little notice. BANG! FAILURE!

I am not going to go into detail on what he or they should have done but there are some general lessons to learn.

Success can be dangerous for it can cover up issues that only become exposed when times get tough.

Have plans for all parts of the business not just the sales or production area but the financial management of the business including managing your investors.

Remember there are many people you need to listen to when you are the head of a business. Let me list who those are

Your investors (and that might be you!)

Your partners – listen to their needs and requirements

Your staff – without them you would have nothing

Your customers – be alert to what they want and if they are changing

Your suppliers – Do not treat them badly; they are your partners

Your bankers – Keep them happy and ensure you do not take them for granted

The press – your image in the marketplace is important and can affect all of the above without you knowing it

And last and not least listen to yourself. Give yourself the space to understand what you think and feel about the situation.

And here is where I come in. Providing that space and challenge to ensure you are focusing on the right things and listening to all the players in your business. FAILURE is only a bad word if you do not learn from what went wrong. I always remember the line from my driving instructor

Enjoy your mistakes; it’s the way you learn

Not very comforting when you crash into a brick wall though!