Last week Melbourne had its hottest heat wave on record - three consecutive days above 43 degrees Celsius - and I had my first ever business coaching session in a swimming pool. It was very cool - pardon the pun.
Because we couldn't write, it meant we had to keep it simple. We could only set goals that we could remember - three for the year and three for the quarter.
It was the first session of the year for my client, who I'll call John, so it included some reflection on 2008. I started working with John at the end of 2007. John is a family friend, and the younger brother of one of my best friends. He's in manufacturing with a factory of 3 staff. Like many people running a small business, he was working hard, a bit stressed and not making much money. He wanted help getting on top of the money, reducing stress and, of course, loving his business.
By the middle of the year last year, its fair to say things were going disastrously. We had implemented a budget to get on top of the money, and at the start of every month he got the figures from his bookkeeper, inputted them into our spreadsheet, and we analysed what was going on. The finances were improving (or so we thought) and he started expanding the team. Then at the end of the financial year we got a rude shock. The actual figures, instead of showing a profit for the six months, showed a $50k loss. What had happened was the figures John was getting from the bookkeeper weren't the final figures. Bills from the previous month would keep coming and getting added to the system, but wouldn't get included in the figures we were looking at.
John was devastated - and thought that perhaps it was time to throw in the towel. I also felt awful. How could I have let this happen? My brief had been to help him reduce his stress and get on top of the money ... And the opposite had happened. And to make it worse, he was a family friend, and I was secretly hoping to come in, help him turn the business around and impress his whole family.
John didn't sack me, and didn't close his business, so we went to work on creating a business that he loved. He realised that his stress came from having so many mouths to feed ... the factory, the staff ... it meant that there was a huge amount of stuff that had to be built and sold just to break even.
John also said that he didn't think he was great at employing people. He just wasn't a great boss ... and it was something he was worried about. However he is great at creating strategic alliances, although that's not what he'd call them. He has lots of people who aren't employees doing different things to help his business ... So perhaps a new business model was in order.
John made some wholesale changes. He moved to a smaller factory that he shares with a mate, and now pays less than a third of the rent. He let go all his staff ... and set up a relationship with his best welder that he will subcontract, get paid at a higher rate, and get a set amount per job. So John only has to pay him when he has the work for him. And without the pressure of all those mouths to feed, John started focussing on just working for the clients he loves working for doing the work he loves, rather than feeling like he had to change everything.
Sitting in the pool, reflecting on his year, John was very relaxed. He'd just come back from the longest holiday he'd had since he started the business. He'd had a very profitable second half of the year and things were looking great financially ... and the future was looking better and better.
There are definitely lessons for me in John's story, but that's a tale for another day. What do you take out of this? Have you suffered growing pains? Have things got overcomplicated in your business? Is it time to get back to basics?
