Everyone thinks that owning a business is the ticket to the easy life, happiness, and fortune.
However rarely is it all that easy.
Every business has times in its lifecycle where it isn't profitable. For some, this is just a short time during start up, for others this might happen during an expansion, downturn in the economy, or others after there has been a technological shift - VCR manufacturers for example.
Even businesses where there is one owner selling a product has a period where they have purchased product or put in time without generating revenue. There are many reasons why businesses aren't profitable.
I have owned a couple businesses that weren't really profitable. In my early 20's I started a company that brought a new product to market "winetux." We struggled because the concept was new, novel and not a necessity item. This company wasn't profitable because I didn't have the talent or resources to get the sales I needed to ensure its viability. The reality was that I was unable to nail down a profitable business model. In the end I sold the business to another company and recouped enough to pay my shareholders back.
The second time I almost went broke was in 1999.
We had built Ave Maria, our first store, into a going concern over the previous decade and when my partner had built a strip mall west of town had decided to open up a larger more varied store.
Instead of sticking to our working model, I thought that a model based on stores I had seen in more metropolitan communities would be successful.
The new store Mother Marias had a deli, bakery, coffee shop, and both organic and regular produce and dry goods. My lack of research into the location and the viability of the final product, overconfidence in my abilities, cost overruns and lack of judgment in hiring and other decisions, led to a catastrophic failure.
In the first year we lost $272,000, which is a fortune for a small business. With the bank manager calling on a daily basis, average sales lower than expected and lower traffic count than was need to meet expenses, I had to make some tough decisions.
We eventually turned the store around enough to become profitable, but I now fully understood the stresses related to business failure.
It is easy to see how business owners faced with struggling businesses can turn to destructive behaviours that lead to sad consequences in their personal and family lives.
The pressures related to a failure in business include:
Monetary issues forced by the necessities of banks or financiers to protect their money. Partner issues related to a lack of vision or inability to agree on changes that need to be made to turn a business around.
Family pressures related to a lack of income or the hours that the entrepreneur might have to put into the business to turn it around.
Staffing issues, perhaps created by poor leadership decisions, and compounded by the owner's stress are not helpful.
Finally self imposed stress related to loss of image, doubts about one's ability, and lack of confidence can often be the final straw.
As a community we need to provide support and have compassion for those struggling in a business in order that we can help the entrepreneur have clarity to be able to see the steps they need to follow to become successful. We need to encourage business owners to find balance in their lives, to share the workload, and use resources that will help them get through the tough times.
We need to realize that small business owners help the economy hum along but often those same business owners have lost opportunity costs of greater wages that they could be making working for government or a large corporation.
That as business owners in many cases they don't have pensions or health care benefits provided for them. They have invested money and time in a business with a high amount of risk.
It might take years of struggle for a business owner to become successful so be careful not to begrudge their success, often times it has come at high personal costs.
Dave Fuller, MBA, is a Certified Professional Business Coach in Prince George. He can be reached at [email protected].
