Three Strategies That Save Companies but Entrepreneurs Hate

Three Strategies That Save Companies but Entrepreneurs Hate

In my experience, there are three situations that can bring an unprepared entrepreneur and his or her company down:

1. Product(s) sales slow, stop or even decline.
2. They run out of money.
3. The complexity of a growing and changing organization becomes unmanageable.

Most business owners find themselves grasping at straws and very confused when one of these events occurs. Their fears run amuck, and they rely on skills that aren’t meant for these kinds of situations.

But as the saying goes: “What got you here won’t get you there.”

Here are three examples of how to best to handle such threats…

1. Strategic Planning: Entrepreneurs don’t understand the value of planning, since they often attribute their success to flexibility and finding short-term opportunities.

   It requires several leaps of faith before an entrepreneur is ready to give it a go and requires usually under-developed skills like out-of-the-box-thinking and aligning of your teams. It takes time and lots of work to craft the story of your company’s future using excellent verbal and writing skills while backing it up with numbers.

2. Raising capital: I can’t tell you how many entrepreneurs and founders I’ve met who absolutely do not want to go out and raise capital from investors. They argue that they don’t want to be beholden to an “ignorant” cash-flow driven investor or risk losing control of their company.

   These are terrible excuses.

   The truth is, raising capital is difficult. You will need to:

   • Get over your fear of finance.
   • Articulate your company’s strategy.
   • “Pitch” to investors.
   • Have someone to “mind the shop” while you’re on the road for multiple days every month courting investors

   All that can be dealt with by hiring an investment advisor to partner with. But finding the right one can be hard and there are minimum amounts a good advisor will work for – it usually starts at $5 Mio and up.

3. Performance Improvement Plans (PIPs) and Reductions in Force (RIF): It’s usually pretty clear how you deal with toxic employees or employees who don’t fit the culture or steal. You let them go.

   But managing people-related issues that are less obvious can sideline a CEO very quickly.A Performance Improvement Plan (PIP) is a way to handle under-performing staff that you would like to keep – either because they have a specialized skill set or have a position that is key for the organization. While it might sound simple, a PIP requires a lot of planning to put together, communicate and execute such a plan.

   On the other hand, when sales falter, some entrepreneurs will burn through reserves and their savings before they are willing to admit they have a problem. But as the money situation gets worse, lay-offs are often the only to fix a bad situation.

   For many entrepreneurs making decisions about who should be let go is one of the hardest decisions they’ll ever make.