It’s inevitable. The wall is coming. At some point in your entrepreneurial career, your business will face a crisis. The sooner you see it coming, the more time you’ll have to deal with it, and the easier time you’ll have getting past it.
Here are some things to look for. It may not mean the wall is imminent, but as they say in the weather business: “The conditions are right for a storm.”
“One of the first things that always happens is the entrepreneur has a very difficult time giving up responsibility to other people, so he’s inundated with all these decisions,” says Robert Hisrich, professor and A. Malachi Mixon Chair in Entrepreneurship at Case Western Reserve University. “The decision making process gets burdened. It gets slower and slower and slower. And they can sense that it’s not happening and they need other people to take over certain responsibilities.”
Hisrich has started several of his own companies and sits on the board of advisers of many more.
When he looks at a company, he examines the percent of sales and profit contributed to products introduced in the last two years. If it’s too low or nonexistent, the company eventually dies, he says.
In addition, Hisrich looks at personnel and customer turnover relative to industry standards. No personnel turnover might be just as bad as too much, he says. And the hardest customer to get is the one you’ve already lost.
Collin Knisely, president of Knisely Consultants Inc. says management awareness is key.
“There are some management teams or entrepreneurs that have the head-in-the-sand mentality, and that it will all work out or this problem will blow away,” he says. “Those are the ones who wait too long to address the problem. And then there’s no hope left without somebody to come in and infuse lots of capital into the business.”
Daniel G. Jacobs