The following is taken from The Ugly Truth About Small Business: 50 Things That Can Go Wrong and What You Can Do About It, written by SNIPS columnist Ruth King and published by Sourcebooks Inc. It's No. 38: ‘I Did It All Myself' and was contributed by longtime HVAC contractor Pat Murphy.
I grew up in the heating and air-conditioning business. My father started the business in 1952 and had my brother and me working in the business from the time we were 5 years old. I wanted to buy the business from my father. However, he insisted that I have my brother as a business partner. I refused since my brother was an alcoholic and was not productively working in the business. He was a detriment and I didn't need a boat anchor around my neck.
So after many disagreements and ultimatums with my father, I started my own company on Sept. 1, 1984. After all, I was 34 years old, young and could do anything. I had a degree in finance, knew how to price, and was educated technically. How hard could it be? I soon learned that it wasn't so easy.
On Sept. 1, 1984, I was the sole employee. I had one customer: a Jersey City businessman who knew what I could do. So I had work immediately but unfortunately with no money in the bank I was extremely overleveraged. That much I knew.
I kept asking myself, "Can you produce the work? Can you get the work done and get it done for the price that you prescribed?" If I was working a job by myself, I did fine. It was when I started to allocate work out that I encountered problems.
Naively, I priced my jobs and service at the rate that it would have taken me to do the job. After all, I thought, everyone has the same work ethic that I have. I hired people assuming that they would work at the level they are supposed to (i.e. my speed and quality). That was a major mistake.
Night movesI spent a lot of time working at night. One job stands out in my mind. I went home, had dinner, and while watching my daughter's softball game, did all of the work necessary for a commercial building. The piping was totally laid out, the order was placed, and the materials were delivered. I gave it to one of my employees with the blueprint that I had laid out exactly the way I wanted the whole job done. Everything was there. I got to the job two days later and there were three times the amount of fittings there. He decided to change the way he was going to do it because he didn't bother following the paperwork. He decided he could do the job better his way and spent twice the amount of money.
So what did I do? I fired him. I said, "I don't need you changing what I've laid out and I can run this damn piping faster than you can." I proved to him, and maybe more to myself, that I could.
I was then in a no-win situation. I had to be on a job to get the work done but I couldn't solicit more work because I had to be on a job. I was running in circles. I did the work well. However, I didn't have time to get more work to continue doing the work well. But, if I delegated the work and it didn't get done well and the more work I got, the worse it was.
My wife did work in the office. Unfortunately, she struggled with the numbers and when the numbers didn't work, she wouldn't want to get me upset. So, she didn't show me the numbers. That turned into a snowball effect because I thought the numbers were fine and when I found the numbers weren't fine I was in a huge hole.
Lean timesI decided to shrink the company from 10 to 12 employees down to two. This seemed to be the solution. However, it wasn't. I couldn't support myself with the debt load I had built as a 10- to 12-person company.
We survived. But by the time I closed the business we had at least a quarter-million dollars in debt. I prayed a lot. I learned how hard it was to make the payroll, pay the taxes, interest payments and everything else.
Every job that I took on was finished. Unfortunately, it did cost me the business.
The business lasted about 10 years. I started phasing the business down about 1991 or 1992, full-well knowing that I had been overly leveraged and was in debt up to my ears because of it. It just didn't make sense to continue. I had two children and I had to generate income. The business wasn't generating enough cash to eat and keep a roof over our heads. I started to teach and that led me down a very different path. In 2004, I paid the last of the debt off from the business.
EducationWhat I learned:
- The most important asset of any company is its employees. At that time, 20 years ago, I was woefully inadequate at picking out my best assets. I did what everyone else did: I needed bodies, any bodies, whether they were good on the job or not. That is what creates most of the problems. The productivity just went down. You need the right employees in the right jobs.
- You need a support team. You use the support mechanism which is extremely important to reduce your terror.
- You have to have financial support.
Would I start another business again? Yes, I would. But, I would definitely do a lot more planning before I started it and I would not start one without the proper financial support. And, I would have a series of mentors that I could talk to.
Applying the lessons learned to your business:
If you try to do everything yourself you will end up in a dangerous sell-produce curve. You'll sell until you get a job, then produce the work. When it is done, there is nothing to do until you sell another job. When you are selling, you are not producing and when you are producing the work, you are not selling. This can burn you out and ultimately destroy your business.
You need a continuous selling and marketing effort. This can be accomplished by an advertising and "drip-marketing" program. Drip marketing is a regular, small, marketing activity that is sent to your customers every month. It could be an e-mail, a postcard, a letter, or another form of advertising. The key is that it is continuous with a consistent message.
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