The Boogieman of Small Business - Part II
Last time we looked at a company that was in Infrastructure Creation and Infrastructure Peak. Things were going well in this business; they were "killing the competition." They grew, and then grew some more. But this is not necessarily good. What happens next?
Our company grew some more, and things got worse
Sales grew even more, but things seemed to change. I did not understand how we could have so little cash when our sales were almost ten times higher than the second year after we started our business. My instincts were to continue doing the things that got me to where I was at this level of sales. I found it harder, however, to interview all the new prospective employees, to manage cash, to sign all the checks, to fire unproductive people.
I dreaded the endless meetings with lenders, accountants, attorneys, pension administrators, insurance agents, vendors, complaining employees, complaining customers, government auditors, etc. I used to spend most of my time creating ideas and spending time with my key customers. Somehow, these endless meetings drained my energy to remain creative. I feared meeting with customers because our quality somehow was not the same as when our sales volume was smaller.
We had no idea
We had no idea how difficult it was to deal with the Family Medical Leave Act, OSHA, workers compensation audits, sales tax audits, IRS audits, bank examiner audits, etc. The endless questions, the time, and the money we had to spend were frustrating beyond my ability to describe.
The employees who were so willing and eager to work long hours for a reasonable salary began to get a little greedy. They assumed our company was floating in cash because of the high sales volume. They always wanted more. More wages. More vacations. More profit sharing money. More paid holidays. More health care. More dental benefits. More, more, more!
Even more frustrating, some of my people began to leave to work for the competition. One "loyal" employee left my company because he could get paid $500.00 a year more from someone else! I thought we should have a little more loyalty from some of the employees who left. We then not only had to replace these people but had to spend time trying to train them, all of which took more time and money than we ever expected.
Besides, where did all the cash go? I'm not getting paid that much more than I was a few years ago. In fact, I recently had to put money into the company to meet a payroll. My bookkeeper and other employees have never given me an adequate explanation where all the cash has gone. Is it possible that someone is stealing from the company? What do I have to do to help the bank understand that they should lend me more money?
This company is in trouble! It is in a phase called Infrastructure Outgrowth. But how did that happen when things seemed to be going so well?
Next time we will have the final chapter in "What Keeps You Awake At Night." We will learn what happened, and how to fix it.