NASE Blogs

Who's Minding The Store?

Monday, March 01, 2010

Even though a lot of small businesses are feeling some rough seas of the economy ... other businesses are experiencing the rewards of their blood, sweat and tears. For some, customers are banging down the doors throwing money at them and vendors are happy to negotiate prices that will get products off their shelves. Yes, for some people the entrepreneurial life is good! The question is ... how long will it last?

For those of you that are discovering a cash cow in your business ... be careful about leaning back in that $2,000 executive massage chair remembering those by-gone eighteen hour days when you were doing everything yourself, from emptying the trash to putting stamps on a few hundred marketing letters that you couldn't afford to hire someone to do. Yes! Those days might be over and the biggest question on your mind is: "Where are you and your buddies going to go for lunch?" But ... don’t let yourself get trapped.

While this is still a daydream for a lot of small-business owners, for thousands of entrepreneurs it's reality ... but will it last? And don’t think that just because you are in the majority that is trying to figure out if you can survive the next year or so until the economy makes a turn that you might not face this same issue and be part of the entrepreneurial success trend.

I've seen too many cases where business owners spend years burning both ends of the candle to build their business. After months of sleepless nights the profits are great and the cash is flowing. Then suddenly, and without warning, the business is in turmoil. Production is behind and what products or services do go out the door doesn't meet the quality standards that used to be what the company stood for. Clients are dropping like flies and the bank wants to know where the payment is for all that new office furniture you bought.

So what happened? Where did things go wrong? After all, you hired good people who were supposed to be running the business! And there's the rub. While it's natural to build a business on the shoulders of good employees, it's also a time when small-business owners start to cash in and get a little too loose with the reins of the business.

Take the example of a successful Dallas, Texas company that was doing quite well when they hired an in-house accountant to take care of the books and handle all the financial work that was nothing but a hassle to the owner. The accountant took care of the books all right, to the tune of embezzling over $2 million from the company over a number of years. While this key employee was eventually caught and prosecuted it was an expensive lesson for the company and every one of those dollars ended up coming out of the pocket of the business owner.

And don't think that you have to have big bucks coming in the door to entice people to want a bigger piece of your pie. From my personal experience dealing with small businesses, finances are pretty close to the top of the list of what business owners don't want to deal with. So they hire someone to keep the books, and they sign just about everything that the bookkeeper puts in front of them … including fake invoices, checks for employees who don't exist, or just careless invoices which might be duplicate payments or one of those tricky gimmick invoices from a yellow page company.

While there are thousands of stories of business owners who decide that it's payback time and start spending more time away from their business than at it, it's not always the truant owner who loses. The other side of the sword is the business owner who doesn't know how to delegate and has so many irons in the fire that he or she can't keep up with everything that is going on ... including what employees are or are not doing.

All this is not to say that you shouldn't put trust in the people who work for you. To the contrary, it's impossible for a business to grow without delegating responsibility. And it's true that one of the best ways to grow a business is to surround yourself with good people. However, it doesn't mean that you can hire someone and then let them go in whatever direction they want. No matter how good an employee might seem, you are the ultimate authority and it's your money they are playing with.

So how does a business owner cover all the bases? The first step is to keep in touch with what's going on and "manage by walking around." It's amazing how much information you can discover just by keeping in touch with people in a business. Talk to employees to get information about how efficiently ... or inefficiently ... the business is running. And don't forget customers. If you really want to take the heartbeat of your business, spend a couple of hours on the phone talking with your customers and ask them how things are going. This all goes back to the issue that 80-percent of all problems in business are caused by poor or the lack of communications … usually from the owner.

For those of you who think that "checking up on people" might be intrusive on employees and give them the feeling that you don't trust them, let me offer a couple of points. First of all, it's your business and as the owner it's your responsibility to know what's going on. This means checking on employees and the work they are doing. The second point is that anyone who has a problem with having their work being checked probably has a good reason for not wanting someone to be looking over their shoulder.

And just for good measure, it's money well spent to have an outside business consultant or other qualified professional come in and help you take a look at what is going on inside the business … including with the boss.

I hope I didn't burst anyone's bubble and I also don't want to turn anyone into a paranoid entrepreneur. It's great to see any business grow and it's good management to hire knowledgeable people to help take the burden off you and make the business grow even more. It's also natural for successful entrepreneurs to reap some of the benefits they worked so hard for.

Just make sure that before you walk out the door … you know who's minding the store!

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