There are many guides and measures as to the health of a business. Financial performance, balance sheet strength and customer sentiment are three of the most common indicators that are measured by businesses in order to assess their ‘health’. However, sometimes certain situations bring other criteria to the fore where your business is exposed to its bare bones and provides a business owner or manager with the ultimate health check. I would like to discuss two situations that confronted me personally and the implications they have for businesses in general.
Customers are the lifeblood of most businesses. Without customers, there would most likely be no businesses so it is fair to say that they are pretty important. Most businesses have different classifications for businesses be they tier one, tier two, class A, class B etc. depending on how large, profitable or strategically important they are to a business. Well, many years ago when I was working as a relatively young and inexperienced State Manager of a publicly listed recruitment business, I faced the fact that we lost a client who accounted for 35% of the overall business turnover and over 20% of our profit. It had a devastating effect on the bottom line, staff morale and our ability to leverage into this sector.
The first thing that happened was that the account manager for this client became totally disenfranchised. Caught up in the feeling of being a permanent victim, they were unable to get past losing the customer and felt as though this loss had challenged their status in the office and the company in general. She felt as though this client had left us through no fault of her own and never fully accepted the feedback that we had started to take the client for granted. As a manager, I spent time in the victim category and was instantly put under some pressure from my manager. However, it didn’t take me too long to snap out of it and make some changes. The client feedback was real and it was valid and we needed to learn from it. We had become arrogant and lazy towards this customer and, to be fair, they did let us know this many times before terminating our contract. As the State Manager, this was a direct reflection on me and I had to make a change and that change was to ensure that we always treated customers like gold. Customers were at the centre of everything we did and, ever so slowly, we did turn things around. Staff became reinvigorated and we quickly acquired new customers at a higher margin. Losing our largest customer strengthened us in the long run.
Recently, I have had to deal with perhaps my greatest challenge as a business owner. Last year, a key founding staff member was diagnosed with a serious illness. He wasn’t a typical key staff member; in some ways he was the heartbeat of Optimum and was a vital conduit of information. When he was first diagnosed and taken out of circulation from work, I adopted the turtle strategy; I retreated into my shell and pretended that it didn’t happen. He would be back at work within a couple of months and we would not miss a beat. However a couple of months quickly became six and then nine and I had to accept the fact that the illness may have longer and more far reaching ramifications that I ever expected. Finally, I awoke from my management slumber and got active. We reallocated work that was once his to other people. I took more responsibility for certain areas. People all pitched in and stood up and the business started, albeit slowly, to recover. It will never be the same in here until he does return, however the business had to keep going forward. I realised how reliant I had become on his support and how valuable he was. My business was vulnerable and we were exposed and it took me nine months to fully appreciate it and do something about it. Hopefully, we are now more healthy than before and strong enough to deal with these challenges.
Every business has key measures and indicators that determine whether a business is healthy or not. There are the obvious ones such as financials, staff and customer engagement levels. However for me, it is when something totally unexpected occurs that rocks the foundation of a business that determines if it is truly healthy. How a business responds and adapts to these challenges says more about its health than anything else. I hope you are quicker in acting decisively than I was with the two examples I have shared with you; pretending that something is not happening gets you nowhere. Good luck when you have one of these health check moments.
PS – I look forward to the day when my key team member does return; even if he does give me grey hair!
Brad McMahon – Managing Director