It has just past that time of year when my diary is full, with clients trooping through the door to discuss and hopefully agree their profits (or losses) and sign their Tax Returns.
In a lot of cases, I haven’t seen or spoken to the client since the previous year and it is only now that I see how their decision making has affected the profitability of their respective businesses.
Hindsight is 20:20 vision; when you look back, all the dots seem to connect and that is when you fully discover whether the decisions you made paid off or didn’t. However, looking at the dots again and it becomes clear that some of those dots reflect the choices you didn’t make and the risks you didn’t take.
Which is your style?
One of the phrases I’ve used time and again in these annual chats with clients is, Not making a decision, is a decision in itself. By that I mean than by consciously not making a decision you are effectively letting outside forces control events. In other words you end up reacting to events instead of setting the agenda by being pro-active.
One of the phrases I hear time and time again is, If only I had…………… So I thought today I would share some of the more common areas where a number of my clients now have regrets on decisions they now wish they had made or in many cases, hadn’t made:
-
Opting for “Safe”
Making a courageous decision, does not mean that you aren’t afraid of the possible negative consequences, it simply means that you are taking a calculated risk which just may not pay off. Making a decision without weighing up the odds is quite simply recklessness. By not making that choice and settling for the status quo, will often mean than a business starts going backwards.
-
Try and try again
There is no such thing as the perfect business plan, it’s often a case of trial and error; but if you repeatedly try, over time you’ll grow more skilled, more experienced, and more connected which will mean an even greater percentage of your efforts will succeed. In other words learn by experience, don’t look at your reducing profits and plaintively utter the phrase that I hear all too often But we’ve always done it that way…….
-
Inertia
Unless you’re a one-man or woman business operating from home, there comes a point with most businesses, when to move forward you have to consider moving premises. However, all too often you’re moving out of your comfort zone which may involve relocating your family and not having the familiarity of friends and places around you. If the decision to move has been investigated and is likely to work, don’t let emotion cloud your judgement.
-
Moving on
When you’re in business there are many occasions when individuals and other organisations do and say things that are unfair and hurtful. Don’t let bitterness and resentment affect how you interact with the majority of people you deal with; harbouring a grudge is ultimately self-destructive, so move on.
-
Sorry I made a mistake
We all cock-up occasionally, unfortunately too many people won’t admit they’ve made a mistake and try and bull their way out of it. However in the majority of cases this will come back and bite you on the bum and then you’re in a damage limitation exercise, which will usually cost you. If you’re lucky it will only be a red face but all too often there is an expensive price tag attached.
If you’ve made a mistake admit it, apologise and then move heaven and earth to rectify the situation, it will give you far more credibility and often a considerable number of brownie points!
-
Cashflow
We all know that with banks restriction on overdrafts and lending, a business’s cashflow can on occasions be tight. The problem with too many businesses is that in the periods when the cash is flowing in, there is no thought for those inevitable future bad times. I always advise my clients that once they are established, create an adequate contingent reserve and only spend the money, if and when it’s clear that it isn’t needed.
Too many owners of SME’s have a tendency to overdo it when the cashflow cycle is at its peak; which manifests itself by overspending on new bits of “must have” kit, such as a shiny new car or taking too much out as wages. Far too often they do so without a thought of the big VAT bill looming up in a couple of months’ time, or the annual and inevitable January 31st payment to HMRC. So, do not spend the money without adequate forward planning, you know it makes sense!
-
What’s Plan B?
Too many businesses have a tried and trusted way of working, that has been successful in the past, so there is an understandable tendency not to change anything, if it ‘aint broke. I see this mistake manifesting itself time and time again these days, with businesses slowly, but imperceptibly moving backwards.
Find Out more in the decision bog blog
The most common reason is a business that has always relied on customer loyalty plus an Ad in the Yellow Pages to see them through. What the owners can’t or won’t see is the growing influence of the internet and the fact that customers are far more fickle these days; so develop alternatives, it may be hard, it may cost you money, but ultimately in a few years’ time you’ll still have a business and by moving with the times, your business may well be more profitable.
The above list is not comprehensive, but in the light of my many years of experience dealing with SME’s, it does encompass most of the reasons why small and medium sized businesses have been successful or have sadly failed.
If any of you would like more detailed information on any aspect of Small Business Decision Making, send me an e-mail and I’ll be pleased to advise further.
David Jones is the Senior Partner and Founder of Morgan Jones & Company. Born in Liverpool and an Accountancy graduate of the University of Wolverhampton, David spent twenty years working for the Customs & Excise in London then Shrewsbury before starting his own business. David's depth of knowledge of the UK tax system and his ability to communicate this learning has seen Morgan Jones & Company grow into Shropshire's most respected Accountancy Practice.