“We’re much more likely to choke vs. starve to death,” quipped one of my mentors last week. The quote really stuck with me and clearly brought home the challenges facing many CI businesses (including my own).
What did he mean by “choke to death”? I surmised that we all spend an inordinate amount of time focusing on the potential for lack of work vs. re-orienting around the real challenge: how do we effectively scale with ever-surging demand?
Also by Henry Clifford: What to Say When Asked, “Is This Your Best Price?”
I’m certainly guilty of worrying more about starvation and often completely ignoring the potential for “death by choking.” I stepped back from this fear and tried to apply some logic to it. Over the last 100 months, we’ve been slow for three months and slammed 97 months. That means I’ve been spending a lot of time worrying about something that only happens 3 percent of the time. Why? Loss aversion is a powerful motivator. We don’t want to lose, and sometimes stop playing to win (maybe we never were). Irrational fear of starvation also stems from factors like upbringing (I experienced financial instability as a kid) or the desire to preserve what we’ve built (I don’t have the same risk profile as I did at age 24). What else amused me during my evaluation is the relatively small list of starvation-related causes of death vs. myriad choking death traps:
Common Causes of Starving to Death:
- Lack of preparedness for economic downturn — We’ve had a pretty good bull run since 2010. If you haven’t put any cash away, it might be a good time to start planning that.
- Market shifts — Our industry seems to reinvent itself every 18 months. Do you know who your ideal customer is (and isn’t)?
- Poor reputation due to low-quality work — As the saying goes, “It only takes one ‘oh s%# to ruin 99 attaboys.’” Are you soliciting reviews from all your customers and responding quickly to any 3-star and below reviews?
Common Causes of Choking to Death:
- Under-resourced sales and installation teams (hiring too slowly or not firing quickly enough) — This one is tough. By the time the market has shifted, it can be tough to staff-up quickly in a world where many employees take four-to-six months to fully onboard. Consider a policy of “always be courting” to make hiring and churning bottom performers part of your company culture.
- High turnover — Unhappy employees will leave your company. Your company has a culture, but is it the one you want? If you don’t have a strong sense of your own culture, it’s tough to scale a business where people don’t want to stick around.
- Poor training — Try and avoid the temptation to throw your new hires into the field right away. The first 45–90 days are critical to ensuring an employee is getting on the right path. Ignoring training on the front end is one of the leading causes of employee turnover.
- Supply chain issues — If you don’t have solid relationships with your suppliers, consider making that a priority. If they don’t feel like they’re part of your team, they’re not going to get brought into your vision and that drives down the likelihood they’ll be there for you when the going gets tough.
- Failure to handle inbound customer inquiries in a timely manner — Voicemail sucks. If you’re sending clients to a phone tree death, you might as well forward the calls to a competitor. Consider a solution like hiring a dedicated resource to handle incoming calls, texts, and emails or partner with a remote managed service provider like Parasol or OneVision Resources. [Full disclosure: I’m a co-founder of Parasol.]
- Not enough working capital — This one’s a killer. Banks won’t lend you money when you need it. My experience has shown me a typical CI business needs hundreds of thousands of dollars available to cover expenses like payroll and revolving lines. The first few years may involve credit card debt and a second mortgage. Ignore this one at your peril.
- Poor organizational structure — Outfits like VITAL Management and CEDIA have published resources showing how a typical CI business should be structured. You don’t need to reinvent the wheel: $200k revenue per employee with team members empowered to make things right for the customer without red tape is a surefire recipe for success.
- Owner is the center of the universe — It’s tough to move away from being the center of the universe in an industry where the CI business owner is often the chief rainmaker. What if you couldn’t sell? Who would you hire? Consider investing in building a solid sales team. It will take you a long time to build this group, so there’s no time like the present to get started!
I’m trying to be better about focusing on how we can avoid choking to death and avoiding the irrational worrying that comes from fears of starvation. It’s easier said than done, but applying some logic to it has helped a great deal.
Also by Henry Clifford: Long-Term Success – Where will you be in 2035?
What are you doing to avoid a choking death in your business?
Stay frosty, and see you in the field.