Category: Management

5 Reasons Why Your Business Will Fail

“It’s fine to celebrate success but it is more important to heed the lessons of failure.” – Bill Gates

We all know that making mistakes can be a hugely positive learning experience, so what about business failures? Blogs, books, and podcasts are full recipes on how to succeed but largely silent about how to cope with failure. Why is it taboo to talk about failures in the context of business and leadership? Understanding and learning why business fail can give us greater insight into how to successfully manage and grow our business.

So why do business fail?

Is it a lack of leadership or bad management? Shrinking or declining industry? Cash flow problems? Lack of business acumen or financial skills? Lack of planning?  Over the past 15 years I had the opportunity to lead FCP from inception to over $20 Million in annual sales. We’ve teetered on the brink of insolvency more than a handful of times and I’ve learned a lot along the way.  In my real world experience businesses fail for 5 primary reasons:

1. Bad Numbers

“If you don’t know your numbers, you don’t know you’re business” – Marcus Lemonis

Arguably the most important part of any business is the money that comes in and the money that goes out. With bad numbers, or no numbers at all, you’re flying blind – and you’re not in control. Without good numbers you won’t be able to track the performance of the business which will always lead to bad decisions. If you’ve got good numbers and you watch them closely, they’ll tell a story. Understanding that story can be one of the most important factors that determine your long term success.  We’re not talking about the kind of understanding of numbers that an outside hired accounting firm that files your taxes has, but someone inside the business in a financial leadership role that tracks and reports on critical numbers monthly, quarterly, and annually.

2. Bad People (Culture)

“Culture eats strategy for breakfast” – Peter Drucker

The people of your business, their habits, and values collectively make up the culture, good or bad. Without a strong culture your change initiatives will fail, there will be limited interaction and collaboration between employees and departments, and no progress will be made on critical business initiatives. There will be high levels of inconsistency and ambiguity, and there will be a sharp decline in levels of service resulting in a loss of customers, ultimately reducing the value of your brand. If you don’t have the right people or culture in place, your business (and brand) will not succeed.

3. Lack of Focus

“Here is the prime condition of success: Concentrate your energy, thought and capital exclusively upon the business in which you are engaged. Having begun on one line, resolve to fight it out on that line, to lead in it, adopt every improvement, and know the most about it.”— Andrew Carnegie

As businesses grow and become more successful they often tend to diversify away from their core business. Businesses decide to focus growth on the weaker areas of the business, mistaking them for areas of opportunity, and the core business suffers as a result. This results in lack of clarity, over-commitment, and improper allocation of business resources. You need more infrastructures (and costs) to support more product and revenue generating opportunities and you become increasingly complex, making it difficult to adapt to change when you’re less agile. With so many priorities, you and your team’s bandwidth quickly diminishes and you’ll end up doing nothing well.  If you’ve got more than one or two core businesses, your business is likely to fail.

4. No Change Agents at the Top

“It didn’t matter how bleak the situation or how stultifying their mediocrity, they all maintained unwavering faith that they would not just survive, but prevail as a great company. And yet, at the same time, they became relentlessly disciplined at confronting the most brutal facts of their current reality.” – Jim Collins

Every business must have a change agent at the top to endure over the long run. It’s the type of head-on management style that feels comfortable facing harsh reality of the situation, can evaluate a business without bias, have tough conversations, and can deliver those brutal facts that influence and impact the businesses decisions and strategy.  Often small and medium size business owners are conflict adverse, feeling the need to be liked by everyone, or just stubborn to change. Even when the business owners are confronted by employees with the problems I the business and they recognize they employees are right, they refuse to change and continue to make the same mistakes over and over. If you don’t have change agents exposing problems and creating solutions, your business is likely to fail.

5. No Purple Cow (No Clear Differentiators)

“In a crowded marketplace, fitting in is a failure. In a busy marketplace, not standing out is the same as being invisible.” – Seth Godin

Finding and creating your market differentiators is crucial for business success.  A “purple cow” is a marketing concept developed by Seth Godin that states that companies must build things worth noticing in their products, and if their product that isn’t in itself unique and somehow remarkable, like a purple cow, is unlikely to sell, no matter how well it’s advertised. With the internet, consumers now have global access and chances are your products and services are offered by someone else somewhere in the world. If you have no differentiator and you can’t answer “Why would a customer choose my business over a competitors”, your business is likely to fail.

In your opinion why do businesses fail?

Effective Management: Developing Your Employees, Building Teams & Growing a Department

Have you been told you’re too friendly to be an effective manager or leader? It’s not your job to be liked. Your job is to be the be the most effective leader and manager you can be for your employees and team.

Measure your effectiveness as a leader and manager on:

  1. How well you understand what your employees highest potential is
  2. How well you help the employee realize what their highest potential is
  3. How much of that you are developing and unlocking

Developing Your Employees

An effective manager provides their employees clear direction, goals, expectations and feedback as well as an overall understanding of where they fit in and what’s next for them.

  • If you asked all of your employees if they know where they currently stand, do they REALLY know where they stand?
  • Would their overall response be “I think I’m doing pretty well?”
  • 85% of employees say that career growth is the key reward at an organization. If we asked your employees what’s next for them and their career, do they have a clear vision and pathway from you?

Actionable item: Create a list all of your employees and next to each one write a sentence or two summarizing where they REALLY stand. Then tell them – directly, with support and candor. Get the dialogue started on their career. Ask them “what’s next” for them.

Building Your Team

An effective manager has a relentless pursuit for uncovering deep-rooted problems within their team, candidly discussing problems and solutions with a key group of people, then implementing and driving a plan to completion.  As much as you would like to think your employees tell you what’s wrong, there only telling you what you want to hear. The essential pieces of feedback are left unsaid and you’ve got to make it your mission to find it.

  • Are you being honest and transparent with yourself and your team about the REAL issues plaguing your department, employees, or team? What are the issues people are talking or thinking about, that they are not willing for comfortable to discuss.
  • Are you discussing the tough issues with your core team weekly and working with them to find solutions?
  • How frequent are your one on ones? Not the “How’s everything going” one on ones, but the “tell me what’s really busted in our department” one on ones.

Actionable Item: Go on a fact finding mission throughout the week. Solicit employees for their feedback and let them know you want to hear ALL the issues so you can start addressing the problems. Meet with your core team on Friday and prep them to come to the meeting with the top departmental issues, top people issues, and top opportunities. Use the Friday meeting as an nondiscriminatory brainstorming session, prioritize the issues order, and then over the weekend develop the directives for the upcoming week based on the feedback session.

Growing Your Department

A well run department has specific work guidelines, consistent communication of goals and progress, clear performance expectations from its members, and strong reinforcement and adherence to those performance expectations.

  • Do your employees have a defined structure with clear boundaries, defined roles, and know their work expectations?
  • Are members clearly and immediately addressed when expectations are not met?
  • How well would your team rate the quality and frequency of your group communication relating to the progress and goals of the department and how it fits into the organization and strategy?

Actionable Item: Create a list of general performance expectations. Print out the job descriptions that each employee received and make sure that they are current; expectations are clear, and the job duties and roles are still relevant. If they aren’t, then you need to rewrite them immediately and re-establish job role and duties with your employee.

Managing High Growth Companies

Over the past few years I’ve had the opportunity as CEO to experience times of slow growth when we were on the brink of insolvency to periods of high growth where the demand is far greater than the capacity of the workforce. Both are equally as challenging. Here are some characteristics of high growth companies as well as some strategies for managing through the change.

Characteristics and Challenges of High Growth Companies

  • Short term focus versus long term focus – stuck in day to day
  • Substantial increase in volume of work, increased problems and frustration
  • Employees with inadequate skills and business with inadequate systems
  • Internal turmoil – new employees, decision making changes, turnover
  • Talent management – employees aren’t growing or maturing at same rate as company
  • Recruitment – trouble hiring employees who are action oriented and comfortable with change
  • Development of employees –not providing appropriate time for career development and goals
  • Decreased morale and satisfaction with manager and position – employees feeling stretched

Strategies for Managing High Growth

  • Vision and values need to be reinforced by management team
  • “How can we do this better” as a response to “I have too much work”
  • Communication has to be clear and frequent – what, why and how
  • Actively managing versus passively managing
  • Handle employee concerns or complaints serious – as if they were customer complaints
  • Carving out time to focus on long term
  • Improving and simplifying systems – both process and technology
  • HR to play larger role in employee-manager relationship management

Annual Letter to Employees from the President & CEO

As the CEO it’s my job to set the tone of the organization for the upcoming year. For us in 2014 we want to make sure we stay true to our vision and values as well as keep focus on the core business, something that we didn’t do in the past. As a manager or leader of your department or organization, you must set the tone for your team. Nowhere in a business is influence more valuable than where tone is set from the top

Here’s a copy of our annual letter from the President & CEO that we sent out to our 33 employees:


Nick and I would like to thank you for all of your hard work and outstanding contributions this year. We know how much time and energy this company demands and we deeply appreciate all of your efforts to make it a fantastic success.  Our loyal customers can always count on you, your team can always count on you, and we can always count on you to go that extra mile.  We have to thank you again for all you do for FCP.

2013 was a transformational year for us. We have enjoyed double-digit revenue growth bringing us to nearly $15 million in annual sales, we returned to profitability; and, most importantly, we re-established our values and made significant improvements to the organization developing a solid culture of service, support, and recognition. 

As we grow and become more successful, it tends to attract bigger and better opportunities. As we succeed, a key challenge becomes prioritizing those opportunities, and what we’ve learned from experience is that trying to do too much results in a lack of clarity, over-commitment; and we wind up disappointing people, exhausting ourselves, or simply failing.

To prevent this complexity we have made a commitment to only pursue opportunities that help strengthen our core business, the core that has produced over a decade of remarkable revenue growth, the same one that has helped us through 2013 stronger than ever.

Now, we have a simple goal for 2014: Stay focused, follow our vision, aim for simplicity, and continue building our great team. We have committed ourselves to never lose sight of what we are trying to achieve. We will continue to focus our energy and attention on our vision:  to set the standard for quality and service in the automotive industry. 

FCP is entering a new era, in a new facility, with great talent, and a great plan.

Let’s welcome 2014 as our new home, we’ve all earned it.

Happy New Year,

Nick & Scott

What did you do to set the tone for your department or organization for 2014?

Constructive Criticism: 3 Simple Ways to Give Effective Negative Feedback

Let’s skip the “praise sandwich” and learn how to give candid constructive feedback.

In my previous article, The Power of Positive Reinforcement, I emphasized the importance of recognizing and reinforcing positive behaviors. There comes a time though when delivering negative feedback is inevitable. Most managers in my experience find it very difficult to give negative performance feedback, but if you show that you are motivated by the desire to help and not to punish, it doesn’t have to be an unpleasant task.  Here are three ways that I preface constructive criticism or negative feedback to encourage my employees and keep them motivated:

Let them know that they are valuable enough to invest time and resources into them:

 “I appreciate all you’ve done for us. The company is very supportive of your efforts and committed to putting resources behind your growth and development. There are a few areas where I think we can make some improvements to make an even bigger impact on the organization. “

Let them know that you are supportive of their development and success:

“You’ve shown a lot of commitment to this organization and drive to improve yourself. I know you have ambitions and want to improve so please realize that as your manager, I’ve got to be hard on you. “

Let them know that they contribute to the success of the organization:

“You’ve really made a difference here. I’m glad you joined the team and I’m happy to see the progress you’ve made.  If you put in more time in these areas I know you can add even more value to the organization. “

Remember, the goal of any feedback, positive or negative, is to improve the behavior of the other person to bring out the best in your entire company. Learning how to deliver negative feedback will produce positive results and strengthen the relationships with your employees.

So, how do you give negative feedback? I would love to hear your thoughts!

The Secret to Making Good Decisions in Business

Someone recently asked me “Are you scared your going to make a bad decision and the company will suffer?”

Of course I’m scared. I make bad decisions all the time but when it’s time to make a big decision I almost always get it right.

Here’s the trick – an incredibly important concept discussed by Jim Collins in his book Great by ChoiceBullets Before Cannonballs – first “firing bullets” to gain empirical validation before making a big bet (firing a cannonball).

We shoot lots of bullets before we launch cannonballs. You can consider these “bullets” as low-cost, low risk tests or experiments. Your missed shots are quick and have minimal impact on the company. When bullets hit the mark your load your cannonballs and unleash everything you’ve got.  Successful companies find ways to test the waters before investing large resources into a project or making a critical business decision.




The Power of Positive Reinforcement

A close friend and mentor once told me, “young strong leaders typically aren’t good at positive reinforcement because they don’t need it themselves.” He was right, I was awful at giving positive reinforcement. In fact, I don’t think I gave any of my employees positive feedback or encouragement when they did something right, but I could quickly point out when they did something wrong.  I never quite understood the value of positive reinforcement until it came together for me while reading an excerpt out of the book 212 Degree Leadership.

Imagine you are sitting blindfolded with a tinker toy model on a table in front of you, just out of reach. Your task is to reproduce the model in less than two minutes. You cannot touch the model, but you do have a supervisor who can provide you with limited feedback and you have all the supplies you need. Unfortunately, your supervisor has been instructed to provide you with negative feedback only!

Can you imagine how you might feel? You do not know exactly what to make and every time you grab the wrong part you are told “no” or “wrong.” If you happen to grab the right part, you hear nothing at all. Not very inspiring, is it? Yet the simple demonstration represents the disconnect people all over the world frequently feel when the vision is not clear and they are not supported with positive direction and feedback.

Frustration. Anger. Anxiety. Depression. At that very moment I understood how detrimental and demotivating only giving negative feedback was to my employees. Not an ideal working environment for anyone. Plus, it’s exhausting and stressful for the person delivering the feedback.

Now let’s try another round of the exercise. This time, imagine you are still blindfolded with two minutes to reproduce the model, but your supervisor can now provide you with positive feedback. In other words, if you grab a part you need, your supervisor will say “yes” or “right.”

Self-Esteem. Motivation. Confidence. These are the feelings that come to mind when I’m receiving positive reinforcement, giving me the physiological freedom to be creative and do great things.

We all know that positive reinforcement makes it more likely that the behavior will occur again in the future but we often focus our time on what employees are doing wrong versus reinforcing what they are doing right. As I change and grow, I’m learning the value of giving much more positive than negative feedback. Making this shift in my approach was transformational to the culture of my organization, my employees well being and attitudes, and my own personal development and well being.

Try it for a week. I started small by creating two reminders each day in my Google Calendar reminding me to give positive feedback to an employee that is deserving of the praise.

You can also use the five to one method;  for every time you offer corrective action or constructive criticism to an employee, make sure you acknowledge them for five things they’ve done right.

Just remember to keep it authentic though. Too much positive reinforcement can lead to praise overload, diminishing the value.

Managing Business Growth Stages- A Diagnostic Chart

This diagnostic chart by PricewaterhouseCoopers is a fantastic tool that helps identify your company’s stage of growth as well as the management concerns within those stages. It’s something I have referenced back to throughout the years and gives valuable insight into what you may face at the next stage of your business. Planning is one of the most important parts of running a business, and when you know what to expect you’ll dramatically boosts the odds of your success.

We’ve been online since 2001 with annual revenues of $15 million and 34 employees. Our business currently has the characteristics of survival, growth, and expansion with the majority falling in in the growth stage. I give copies of this diagnostic chart to members of my management team and we compare our assessments. It not only gives my team a road map of things to expect as the business matures but also promotes a healthy dialogue between the group.

Here’s a link to the chart: PWC Diagnostic Chart

How Do You Spend Your Time at Work?

Mastering the art of getting shit done takes discipline and lots of planning. As the CEO of a $15 million online business I often get asked how I allocate my time during the working day. Well, here it is:

Employee development – 50%

This  is the most critical part of my job and the one that I allocate the most time resources toward. Investing in employee training and development strategies is critical for the success of any business. It’s the only way to create sustainable and managed growth. As an entrepreneur who’s bootstrapped a business from $0 to $15 Million, there was a time that I did it all; janitor, shipping clerk, customer service, order entry, human resources, purchasing, accounting. It’s debilitating and exhausting, and will only lead to burn out. As a leader, you’ve got to leverage yourself through employees.

Tactical – 20%

This is the day to day, answering emails, talking with employees, putting out fires. Emails usually take up a majority of this time and I try to limit the email to less than 10% but after all, email ” is a game of tetris.

Process Improvement – 10%

I focus on two things here: How can I simplify the process and how can I make the process run better? Typically I will either work directly in the process or scan through email correspondence in my teams email queues or Gmail groups (we have email groups for sales, product team, customer service, products, purchasing, warehouse, and technical support.)  I’ll find the bottlenecks and discuss with the department leads how we can simplify and improve.

Thinking & Strategy – 10%

This is my quiet time which is usually on my commute home. I reflect on the day and assess my performance; did I make improvements to the organization? Did I stay focused on what I set out to do in the morning? Did I get caught up in day to day (tactical) issues that prevented me from allocating my time appropriate? What do I want to accomplish tomorrow?

This time also includes working directly with my leadership team in achieving organizational alignment.  It usually consists of a 2 hour offsite each week.

Professional Development 10%

This includes listening to podcasts and audiobooks, or reading articles and blogs. My commute to work is 45 minutes so it’s perfect amount of time to get into a chapter of an audio book or two 20 minute podcasts.

How do you spend your time at work?

Managing is Like Coaching

Management is like coaching. Coaches do many things, but let’s focus on a few key elements of coaching that parallels managing. These should sound very familiar to us as managers.

  • The coach defines what success means for the team. Individuals contribute to that team success. Winning the world championship is likely not appropriate for every team. Different teams and players are at different stages. But, it is critically important to focus the team on the overall goal.
  • The coach recruits and selects the best team personnel possible.
  • The coach understands the strengths and weaknesses of each player and the team overall. He communicates that information to each player and focuses them on where they need to improve to help the team. And, he articulates each player’s role in the overall success of the team. It’s an honest, two-way discussion. The element of listening is key piece of generating buy-in. The discussions can be difficult. But, a good coach knows his success is dependent on the team’s success, so he has the tough conversations. Likewise, the coach acknowledges and rewards both the team and the players when they’ve done well together and achieved a tough goal.
  • The coach prepares the practice plan that will help develop the players and team. And, that plan is repeated day after day to ingrain the competency into their natural reactions. The players don’t need to think about what they need to do on game-day, it’s instinctive. They already know what to do.
  • Leading up to game-day, the coach tailors the practice sessions for the upcoming competitor – taking advantage of his team’s strengths and his competitor’s weaknesses.
  • On game-day, the coach puts the best team on the field – not necessarily the best players.

REMEMBER: The coach does is not on the field themselves playing – the players are. Are you PLAYING or COACHING?

As managers, our success is wholly dependent on the success of our team. We are coaches and it is in our best interest to learn coaching techniques to improve our performance.