This is my cautionary tale for all small business owners and entrepreneurs about a massive setback, which ultimately resulted in success beyond my dreams.
Ten years ago, in September 2006, I fired my entire company in one day and started my business over.
As the captain of my company, I had let things get way out of hand. The company was $600,000 in debt, revenue was declining due to the lack of a strong sales force and process, and our company culture had become rotten to its core — to the point where I no longer trusted the staff I hired. To accelerate my sense of urgency to make even more swift changes, we had less than 60 days left of cash.
Imagine a ship that is taking on gallons of water because the weight of the cargo is so massive. The only was way to right size the ship would be to remove all of the dead weight. The company could no longer financially support nearly a dozen salaries. Drastic times required drastic measures.
Advisors told me I should first bankrupt the company then start over. I knew that was wrong for me, as vendors should not be paid because of mistakes I had made. By removing all of the salary expenses, the company immediately began to be cash flow positive and profitable. The ship was no longer taking on gallons of water.
Once the office was cleared of the final employee, I first had to deal with me, the CEO / owner. The mess was mine; I created it, and I was embarrassed. I was cloaked in failure due to poor staff management decisions and business ignorance. I was depressed that I allowed this to occur. However, somewhere deep inside was a voice of resolve and resilience that would not allow me to quit.
Two weeks before the business shake-up, I had engaged a business coach to teach me what I did not know. He provided invaluable advice — to listen to my inner resolve and release my negative thoughts. He challenged me to do as many positive actions as possible each day.
Retaining a coach was the first key step in moving the business toward a model of success. It was uncomfortable in the beginning to ask for help, after all I was the CEO, and I thought I should have all of the answers. I quickly learned that a lone entrepreneur is an entrepreneur at risk.
My coach was a sounding board for big decisions, taught me key tactical business methodologies and processes, such as key performance indicators, and the value of daily staff huddles to get a pulse on the business. Together, we created weekly profit and loss reports and a weekly cash flow report. No longer would I be steering my business blindly. His decades of experience and business acumen put me onto a better business path much quicker than I could have on my own.
Three months after I terminated my staff, the business workload was overwhelming for me and I started to hire a new team. Instead of hiring people with relevant, industry specific experience, I decided to hire people based upon their DNA, and teach them our business. It was easier to teach good people our business methods than to hire industry veterans and hope they were a good cultural fit.
A key thing I was teaching my new sales people was the power of the word “no.” While I redefined the business, I made a list of things I did not like about it and decided that the rebooted version of the company would no longer do those things. For example, I decided that we would be margin focused, not revenue focused. This shift in thinking required a massive amount of discipline within our new organization. If a new prospect opportunity did not meet the required margin, we declined the engagement.
We also decided to embrace business consultant Jim Collins’ Hedgehog concept — do one thing and do it well — making us very niche focused. By being niche focused, we had to say “no” to opportunities that did not fit our niche. That was incredibility difficult at times. However, the ultimate value in being so clear was that new employees did not have any confusion about what the company is and isn’t.
In 2008, we had made many strides and the company was in a much healthier position regarding processes, metrics, and culture. Yet, something was still missing — the soul. As the leader, I still did not know why we were in business, other than to serve clients and make money. Then in April 2008, I saw Author Simon Sinek speak about defining why a company is doing business. Our company was missing that why.
By 2010, after many hours of conversations and pondering the purpose of our business, it hit me…our why is to improve lives. If we work to improve the lives of our candidates and clients, the lives of the people who work in our company are also improved.
By seeking the wisdom and experience of a coach, by putting the key business processes into practice on both a weekly and a daily basis, by hiring good people that fit our culture, by focusing on the bottom line, and by having our why, our company has had some amazing successes in the last 10 years.
As CEO, I could not be more proud of the work our team has accomplished. And I couldn’t be more humble to still be in business 10 years after almost closing our doors, and I am grateful that I am able to live our why of improving lives every day.
Todd Palmer is founder and president of Troy-based Diversified Industrial Staffing and Diversified PEOple LLC and a regular contributor to DBusiness.