How to lose business. Real stories from a business consultant
I planned for a long time to talk about the reasons contributing to the death of an existing and often even successful at a certain stage of the business, but all did not reach out. But recently I heard about the bankruptcy of my former client. This fact has become a kind of push for me. I realized that right now, in a crisis, it is very important to understand why a business can end in failure and learn to avoid such situations.
As you know, when there is a crisis in the economy, any business is weakened. If you compare with the human body, the crisis for the economy - as a weakening of the immune system. When a person is healthy, small diseases pass unnoticed. The body itself copes with problems, and in the case of a weakened immunity, any infection can lead to serious diseases or even become fatal.
So it is in business. If during a period of economic growth, some of the shortcomings of a particular business are smoothed out, go unnoticed and do not even interfere too much with work, then during periods of economic recession they become the very “thin spots” that lead to lower profits, certain problems and sometimes complete collapse of the entire business.
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Based on the accumulated material, I would like to tell you about the most common "diseases" of the domestic business that lead to problems. I will not talk about foreign companies, since I have no experience with them, although I suspect that many of the problems I have identified are also inherent in business abroad. Also, I will not talk about large corporations, as I specialize in working with small and medium-sized businesses. I propose and talk about it.
Important: All the stories that I cite as examples are real. In this case, the stories themselves are used as examples, and therefore all coincidences with real people are random.
What did you say? No, it will
But back to my former client. An employee of the company we worked with 4 years ago called me and asked for help. I asked why the owner himself does not call? He received the answer that the business was practically ruined, it was sold, and now he, along with the entire staff, works for the new owner.
Once this client found me through the Internet, and I was required to create an online store, automate a warehouse and transfer the company's work to a new accounting system. Traded company clothing, production of which was carried out under the order.
The head of the company was an excellent representative of the business: he knew exactly what he needed, knew how to set a task concretely and clearly, knew how to count money, but at the same time was not greedy. It was he who created this business from scratch, and skillfully managed it. We worked very well with him, made the site, performed other tasks, after which many times we were happy to talk both on work issues and simply as good friends.
Somewhere a year after we finished the project, this businessman decided to retire and put in his stead the company to manage his son. At that time, the young man was 21 years old, he was already driving a very expensive car. But we didn’t work with him. He simply did not understand what I was doing in the company, and what his own employees were doing, he understood very little.
The only thing with which he was concerned was that no one deceived him and robbed him. In general, the young man was not a real businessman. He understood business in a very peculiar way: the main thing is to bargain well and ensure that no one deceives him.
Therefore, if there were any proposals for improving the work, for example, unlike his father, who thought, wondered how much it would cost and how to implement it, the young man answered with the same phrase:
"What did you say? BUT? No, and it will . ”
As a result, the young leader made such controversial steps aimed, as it seemed to him, to save and increase efficiency:
The main goal of the young leader was to find where and what else you could save. But, as you know, without investment development also does not happen. And the business began to "stagnate." And at this time went 2011-2012., And competitors began to actively promote their products on the market. Moreover, the number of competitors also grew with each passing day.
In addition, for objective reasons, the company lost a seo specialist (he just died), who was working on their website, didn’t look for a rational leader, saved money on labor and investments in search engines. The result is clear, the site began to lose its, once very advantageous, position in search results.
What is the result? The business owner removed his son from the management of the company, but unfortunately late. Business had to sell. And now the company is owned by completely different people.
Deliver me from relatives, and I will get you rich!
What is nepotism? This is work with relatives, friends, acquaintances, this is the appointment of their responsible positions, even if these people do not have the necessary qualifications.
So, I worked with a large franchisor to automate their retail network. The company was really large, it had several directions: a development business, a network of retail stores, as well as a chain of restaurants and some other areas. All this together was called holding. But still the main focus was just a network of retail stores.
I was attracted to work with this holding on the project of transition from one system to another. I was the leader of this project on the part of the performer. And at the beginning I spoke mainly with the head of the IT department, whose position was: IT director. Unfortunately, this IT-director was not competent enough, it caught the eye immediately, and subsequently it was confirmed more than once. Imagine, for several months we could not get to work, because the IT director could not solve the issues with the conclusion of contracts and providing me with the necessary access!
Questions that should be resolved within 1-2 days with this person dragged on for weeks. As a result, I got tired of all this, and I decided to go directly to the company's general director (business owner). I was very actively discouraged from this decision by employees of the company, talking about the despotism of the director, about how complicated his character was. But the situation was already so sad that I decided it would not be worse. Either I agree with the general director, or the project runs the risk of delaying for another six months, and all this time will remain at the stage of signing contracts.
The general director, Vitaly Ivanovich, turned out to be a really very tough man, here his subordinates did not deceive me. But at the same time, he knew his business very well and quite clearly managed to clarify his problems.
At the same time, literally in my presence, there was a call from a supplier who refused to ship the products, since the amount of debt and the delay in terms of payment exceeded all permissible rates. And the company hit the supplier’s stop list.
At the same time, the chief accountant claimed that, according to his data, the supplier had all been paid a long time ago and even overpaid. And he called a fairly substantial amount.
By the way, pay attention - here, for some reason, it was not the financial director who was responsible for the mutual settlements, and not even the purchasers, who should be aware of all the nuances, but the chief accountant, to the general director.
Later I learned that by the time of our conversation with him in the company, the 10th financial director had already changed. And this is only for one year!
Thus, the company does not agree on mutual settlements with suppliers for a substantial amount, and no one resolved this issue until the situation reached a stop in deliveries and a call from the supplier’s representative to the general director.
A month has passed ...
After my first meeting with Vitaly Ivanovich, our project got off the ground, we worked quite fruitfully. I have more than once communicated with the general director for various reasons. Vitaly Ivanovich was convinced of my competence and that under my leadership the project is actively and successfully developing. And then, in an informal setting, he told me such a thing:
“Ramil! I see that you can work. And if you can deliver me from all these relatives, I will give you a taste of gold. "
As I learned from the subsequent conversation, he was literally surrounded by a huge number of relatives. The chief accountant, IT director, security chief, other managers, and even the secretary — all turned out to be his relatives. But financial directors Vitaly Ivanovich hired from the side. But they were not held for long.
Time went by. Our project successfully developed, we moved forward. But one day, when I came to the reception to the general director, they simply did not let me go in there. As I learned a little later, the IT director, together with the company's chief accountant, asked my immediate superior (I remind you that I was working as a project manager on the part of the contractor) to remove me from this project, although I had almost completed the project. I didn’t like them because at several meetings I asked not convenient questions that put their incompetence on display. This cooperation is over.
And after a while I learned that in 2008 this company went bankrupt and was sold for debts. Of course, there is clearly another problem here - over-lending. But I will not talk about it, as it is from the field of finance, and not business consulting, which I am talking about. But, as I understood, without the problem of nepotism and refinancing there would not have arisen.
The CEO saw the problem, tried to solve it with the help of hired financial directors, but the relatives of the “friendly front” simply survived from the company of the objectionable specialist, and the problem was not solved until it became critical for the existence of the business as a whole.
The relatives of the director were incompetent, they created more problems for the company than they did. But even such a strong person as Vitaly Ivanovich could do nothing with them. This is the main problem of nepotism, you should not mix related (friendly) relations and business, especially if relatives and friends do not know how to leave your personal relationship “beyond the threshold of the office”, and workers - “beyond the threshold of the house”.
In general, relatives in the company are not so bad, but they are very influential. As a rule, this influence is not proportional to their competence. That is, for them your loyalty will be more important than your skills, and if they don’t like you, they will simply remove you regardless of your merits.
Few parts, I want to sell cars!
I once had a client who was engaged in auto parts. It was a very successful business that began to develop in the early 2000s, when the demand for automobile parts clearly exceeded supply. Over time, the company grew, I also conducted several projects for this client and kept in touch with him in the future.
And then, as I found out, the business owner, Oleg, decided to start selling cars. He wanted to sell small trucks. He began to withdraw funds from the turnover of a successful business, took out a loan, opened a car dealership, but a problem arose: these trucks could not get a license to sell, they simply were not certified in Russia. As a result, investments have not paid off. Moreover, he had to sell a significant part of his core business, and instead of a solid and successful auto parts trade, Oleg opened a small auto service.
He was forced to sell and partially rent his retail space, and competitors settled there, which also did not help to restore the former success in the auto parts market.
In principle, the successful business that Oleg had ceased to exist. If, before trying to invest in cars, he had several outlets and 16 sellers, then after all the losses there was a small shop with two sellers and a small car-care center. Naturally, the turnover also decreased significantly.
The reason for the failure is that cars and auto parts are close, similar businesses, but, nevertheless, very different. And an attempt to embrace a new direction in which you do not understand or understand weakly, may end sadly. It is better to do what you know and know how, and not to be scattered on undertakings where you are not a specialist.
Leave it, you will be deprived of health.
Theft is a very serious problem that can lead to a complete collapse, if not detected in a timely manner. Naturally, in such serious cases it is not enough to reveal the existing problems, it is necessary to deal with their prevention. And one of the methods that work perfectly in this case is automation.
It was thanks to the project to automate the work of the warehouse that I met with the owner of the wholesale textile business owner Igor. I was hired to optimize warehouse operations. Naturally, one of the stages was the mandatory automation of accounting, which is accompanied by inventory and major changes in the scheme of the work itself.
And as soon as we started working on the project, some of the staff just quit. Imagine: 2 weeks after the start of work on the project, just before the New Year, 5 out of 18 sellers quit!
They tried to boycott the innovations, but nothing came of it, we continued to work on the project, conducted an inventory and got such a number of layoffs. In this case, three of the retired sellers were able to open the exact same point with a similar product at the other end of the city. They gradually developed and even began to lure customers.
In this situation, there are reasonable questions. Where did they get the goods from ordinary sellers? Where did they get money for business?
Why was theft present in this case? The reasons are obvious:
I will tell about the last case in more detail. The building was a two-story building and, on the stairs, one of the vendors, being in a state of slight intoxication, suggested that I talk. In conversation, he threw me the phrase “Why do you need it? Health is not expensive? "As I understand it, he hinted at some interested people, or rather, at himself and his colleagues. I conveyed this conversation to the head, but he did not do anything. As a result, these employees simply quit, I brought the work to the end without any problems, but the revealed facts of theft did not please.
In principle, it is possible and even necessary to tackle the situation rigidly, even at the stage of the revealed facts of theft. It would be possible to compensate for losses through the court or find another solution to the problem. But Igor acted differently. Business was actively developing at that time, the economy was booming, it seemed that all this was trifles. As a result, his complacency caused problems in his own business.
Over time, these former sellers managed to divert a large majority of customers. Due to financial difficulties, Igor had to sell part of the warehouse, and the buyers were his own former sellers. And now they are already in the role of owners, and not hired staff, engaged in the same textiles, in the same room, with the same clients.
Naturally, the people who worked in the company for more than 3 years knew everything: the customer base, suppliers, and the peculiarities of cooperation with different people, and the business itself were studied quite well. As a result, they took advantage of this information. The new competitors managed to exploit the weaknesses of Igor’s business for their own benefit, and as a result, when the economic situation deteriorated, Igor suffered in the first place. In addition, they were simply strong sellers, and having left the company so unexpectedly, they weakened Igor's business.
Who beat the hat?
At the dawn of my work, back in the 2000s, I met a rather interesting company. I had a client - a small chain of stores, which at that time consisted of 4 stores and 1 distribution center.
There were a lot of problems there, starting with the terrible resorting, when the colognes made their way at the checkout counter as “socks”, socks could be pierced as “shampoo”, etc. Many other processes were also conducted incorrectly, there was no sound accounting system, etc. etc. Then I did not understand that this is not just a lack of automation or flaws, these are all signs of general lack of professionalism. In principle, at that time I did not need to think about it. I had a clear task: to organize interaction at the information level between the distribution center and the shops. The task was interesting, in principle, I solved it.
And in the final stage, I met with the leaders, or rather even the founders of the company. My leader then told me:
“Now customers will come, you, Ramil, are working on their project, you and talk with them.”
When I first saw these founders, I immediately suspected that they were not businessmen, and not even engineers or teachers. They were strong healthy men (this is the right word to describe the portrait of businessmen), as it turned out, the oilmen, who managed to make easy money and decided to invest it in business.
During the conversation, I finally became convinced that in the business that they opened, these people do not understand anything at all. They just thought that they would invest money and everything, then their finances would generate income on their own. I remembered the only question they asked me for a long time. He sounded like this: "Whom to beat on the cap?"
Of course, my story could have seemed to someone an exaggeration, while reminding someone of the “crazy 90s”. Yes, people and times change, but the essence of the problem remains:
If you invest in an unfamiliar business and wait for the money to make the money themselves, most likely, the business will be burned.
The phrase that says that “money makes money” in business is not true. This people make money. And the money itself is nothing more than a tool.
I will put a cow here in the middle of the hall and sell it for an hour
I had a client who also was engaged in trade. It was a non-food wholesale and retail base, on which there were obvious problems in the work. The business owner already suspected something himself, and therefore turned to me for help. The essence of the problem was that there was a lot of goods in the warehouse. But the remnants from time to time did not match. It would seem little things. From time to time, the goods that were listed in the accounting system as being in stock, in fact, did not appear. I then told him that he was rightly worried, because it meant some problems in the accounting system, or in the program, or in the management and control system of employees.
I tried to explain to him that such “bells” is very serious. And no matter where exactly in the accounting system fails, it is important that it exists. Now, when the market is growing, it is not so bad, but the situation may change at any time, there are also periods of recessions, and the number of competitors is constantly increasing. To which he said to me:
“Ramil! Look, it doesn't matter that I trade the hosts. goods, I'm here in the middle of the hall will put a cow, and also selling it for an hour. ”
Imagine the extent to which he was confident in himself? But life puts everything in its place. And now his business has greatly decreased, in practice, the business can be considered lost. But then, when he spoke with me, the company developed, the business gained momentum.
What happened? Problems with the warehouse and accounting, he did not bother to solve. At the same time, new competitors appeared, online trading appeared, customers began to lure. And he remained at the same level of business development as he once did. As a result, practically remained out of work.
And the main reason for his troubles was self-confidence, which prevented development, prevented timely solving problems with the warehouse, and carried out reorganization in accordance with the changed conditions in the market.
Just want to say that in all the cases I have listed, I was hired as an IT consultant. All entrepreneurs were looking for a problem not in themselves or their surroundings, not in the mistakes of building a business, but in the IT sphere. Each time, they were eager to install a new, more advanced system, buy new equipment and organize the work of the warehouse using work automation tools, make an online store, etc.
But in fact, these solutions either did not help at all, or did not help much, since the problem in all the cases listed was not in the IT plane, but in the business building system itself. Software itself is just a tool that people have created. A program is not a silver bullet that will miraculously "kill" all the problems of a business.
Software vendors are also partly to blame for the fact that businesses rely so much on automation to solve problems. But this is a separate topic, and here I will not disclose it.
And the essence of all the problems really lies in the human factor. After all, businessmen - they are the same people as everyone. They have all the same weaknesses as the rest of the people. As you can see, here I did not disclose the topic of businessmen, alcoholics, or businessmen, prone to other vices or hobbies, which are fatal. All of us and without a detailed story understand what it is and how it ends.
I had an alcoholic client who managed to build a great business, but eventually got drunk and drank it all. And everyone knows that such cases are not isolated. Now I remembered these human weaknesses just to remind: a businessman is exactly the same person, with his own weaknesses, character traits and shortcomings.
But how to deal with these weaknesses and mistakes in business? What if you are a businessman or a business consultant who is faced with a similar situation?
An example of success.
In response to these questions, I will tell a story with a good ending. Before that, I remembered only those cases where, for various reasons, I left, and the problems started after I left. I never left a falling business. And in several cases I had to help companies get out of the “pit”.
One of these companies, which turned to me in a problem situation, was engaged in wholesale and retail trade in clothing. I came to them in order, at their request, to tell about the accounting automation system created on the basis of 1C, i.e. they, like many, were looking for a solution to their business problems in the IT sphere.
It was in 2008-2009, i.e. in the midst of a crisis, and the company was going through hard times. Two founders met me (as I later learned), the first one introduced himself as the general director, the second - the financial director. But the fact that both of them are founders, I learned later. The financial director hid his current status, and refused to talk about it.
The situation was really critical. The company has already started taking loans in order to pay salaries to employees. By that time, I already had experience as a business consultant, and therefore I immediately suggested not to rely too much on the program, but first to figure out what was going on in their company. As a result, revealed the problem of nepotism. In this case, it would be even more accurate to say that the problem was friendship.
The company was created by two friends, i.e. have invested in it. They were friends from the student's bench, they trusted each other. In this case, one became the CEO, and the second was engaged in sales. In fact, it turned out that one is a production worker and deals only with this direction. The second fully took over the sale, and purposefully led the company to destroy it. As a financial director, whom he didn’t even count as a matter of fact, he lowered prices when selling and often even sold products a little lower than the cost price. And his friend, the production worker, was too intelligent (in this case it is correct to say - weak) to change this situation.
And in the midst of this situation, I came to them. The first thing we did was analyze the sales chart, the very “pie”. And there we saw that 92% of sales were associated with a company that was directly affiliated with this person. Then they tried to figure out what was going on with the sales founder at all, and found out that he was looking for premises for a new, his own company.
Of course, it was not so simple. Naturally, nobody told me about how the production worker found out about the machinations of his friend. But my numbers and his desire to understand the situation helped to understand that the company was purposefully destroyed from the inside.
For 2.5 years, with my help, this company was taken out of the crisis, the business recovered and began to develop. As soon as the company began to make a profit again, they bought a truck to deliver the goods, and the whole family (along with the chief accountant, who was the production manager's wife) went to Turkey. Prior to this, during the 2.5 years of the company's withdrawal from the crisis, the general director did not go on vacation at all, just like I did. Because a crisis in business is always very serious and requires a huge amount of time and effort, unless, of course, you want to lose the company.
How it was done:
Thus, if you find yourself in such a situation:
Of course, the process of taking a company out of a crisis situation can take years, in my case, a little more than 2 years. But it is possible.
In my case, it was very helpful that the CEO himself was an intelligent and gentle person, able to calmly listen to even unpleasant things, and also that the company was already in crisis, and therefore the owners were ready to accept outside help.
I hope that you did not recognize yourself in my examples, and if they did, then my method of solving problems will help you. And do not forget that there is almost always a way out of any situation. Good luck to you and your customers!
As you know, when there is a crisis in the economy, any business is weakened. If you compare with the human body, the crisis for the economy - as a weakening of the immune system. When a person is healthy, small diseases pass unnoticed. The body itself copes with problems, and in the case of a weakened immunity, any infection can lead to serious diseases or even become fatal.
So it is in business. If during a period of economic growth, some of the shortcomings of a particular business are smoothed out, go unnoticed and do not even interfere too much with work, then during periods of economic recession they become the very “thin spots” that lead to lower profits, certain problems and sometimes complete collapse of the entire business.
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As a business consultant, I communicate with clients quite a lot and for a long time, while I study the work of the company very deeply, often becoming a confidant who is not just implementing a software product or some kind of equipment, but is actively studying the business in search of possible shortcomings proposes a solution to the problems, after which he is engaged in the implementation of these solutions.
We work with someone for a year or even longer on a large project, someone appeals many times, and almost all of the time they call or write, ask some questions. In addition, I myself try to keep in touch after the end of the project, learn about successes and problems, accompany some solutions, help solve some current issues, etc.
As a result, I observe the successes and failures of various companies, I see for a long time what changes are taking place there and what they lead to, as a result of the amount of material for analysis, I have quite large.
Based on the accumulated material, I would like to tell you about the most common "diseases" of the domestic business that lead to problems. I will not talk about foreign companies, since I have no experience with them, although I suspect that many of the problems I have identified are also inherent in business abroad. Also, I will not talk about large corporations, as I specialize in working with small and medium-sized businesses. I propose and talk about it.
Important: All the stories that I cite as examples are real. In this case, the stories themselves are used as examples, and therefore all coincidences with real people are random.
Son for father
What did you say? No, it will
But back to my former client. An employee of the company we worked with 4 years ago called me and asked for help. I asked why the owner himself does not call? He received the answer that the business was practically ruined, it was sold, and now he, along with the entire staff, works for the new owner.
Once this client found me through the Internet, and I was required to create an online store, automate a warehouse and transfer the company's work to a new accounting system. Traded company clothing, production of which was carried out under the order.
The head of the company was an excellent representative of the business: he knew exactly what he needed, knew how to set a task concretely and clearly, knew how to count money, but at the same time was not greedy. It was he who created this business from scratch, and skillfully managed it. We worked very well with him, made the site, performed other tasks, after which many times we were happy to talk both on work issues and simply as good friends.
Somewhere a year after we finished the project, this businessman decided to retire and put in his stead the company to manage his son. At that time, the young man was 21 years old, he was already driving a very expensive car. But we didn’t work with him. He simply did not understand what I was doing in the company, and what his own employees were doing, he understood very little.
The only thing with which he was concerned was that no one deceived him and robbed him. In general, the young man was not a real businessman. He understood business in a very peculiar way: the main thing is to bargain well and ensure that no one deceives him.
Therefore, if there were any proposals for improving the work, for example, unlike his father, who thought, wondered how much it would cost and how to implement it, the young man answered with the same phrase:
"What did you say? BUT? No, and it will . ”
As a result, the young leader made such controversial steps aimed, as it seemed to him, to save and increase efficiency:
- He stopped investing in advertising.
- He stopped investing in SEO.
- Stopped to grow the business.
The main goal of the young leader was to find where and what else you could save. But, as you know, without investment development also does not happen. And the business began to "stagnate." And at this time went 2011-2012., And competitors began to actively promote their products on the market. Moreover, the number of competitors also grew with each passing day.
In addition, for objective reasons, the company lost a seo specialist (he just died), who was working on their website, didn’t look for a rational leader, saved money on labor and investments in search engines. The result is clear, the site began to lose its, once very advantageous, position in search results.
What is the result? The business owner removed his son from the management of the company, but unfortunately late. Business had to sell. And now the company is owned by completely different people.
Nepotism
Deliver me from relatives, and I will get you rich!
What is nepotism? This is work with relatives, friends, acquaintances, this is the appointment of their responsible positions, even if these people do not have the necessary qualifications.
So, I worked with a large franchisor to automate their retail network. The company was really large, it had several directions: a development business, a network of retail stores, as well as a chain of restaurants and some other areas. All this together was called holding. But still the main focus was just a network of retail stores.
I was attracted to work with this holding on the project of transition from one system to another. I was the leader of this project on the part of the performer. And at the beginning I spoke mainly with the head of the IT department, whose position was: IT director. Unfortunately, this IT-director was not competent enough, it caught the eye immediately, and subsequently it was confirmed more than once. Imagine, for several months we could not get to work, because the IT director could not solve the issues with the conclusion of contracts and providing me with the necessary access!
Questions that should be resolved within 1-2 days with this person dragged on for weeks. As a result, I got tired of all this, and I decided to go directly to the company's general director (business owner). I was very actively discouraged from this decision by employees of the company, talking about the despotism of the director, about how complicated his character was. But the situation was already so sad that I decided it would not be worse. Either I agree with the general director, or the project runs the risk of delaying for another six months, and all this time will remain at the stage of signing contracts.
The general director, Vitaly Ivanovich, turned out to be a really very tough man, here his subordinates did not deceive me. But at the same time, he knew his business very well and quite clearly managed to clarify his problems.
At the same time, literally in my presence, there was a call from a supplier who refused to ship the products, since the amount of debt and the delay in terms of payment exceeded all permissible rates. And the company hit the supplier’s stop list.
At the same time, the chief accountant claimed that, according to his data, the supplier had all been paid a long time ago and even overpaid. And he called a fairly substantial amount.
By the way, pay attention - here, for some reason, it was not the financial director who was responsible for the mutual settlements, and not even the purchasers, who should be aware of all the nuances, but the chief accountant, to the general director.
Later I learned that by the time of our conversation with him in the company, the 10th financial director had already changed. And this is only for one year!
Thus, the company does not agree on mutual settlements with suppliers for a substantial amount, and no one resolved this issue until the situation reached a stop in deliveries and a call from the supplier’s representative to the general director.
A month has passed ...
After my first meeting with Vitaly Ivanovich, our project got off the ground, we worked quite fruitfully. I have more than once communicated with the general director for various reasons. Vitaly Ivanovich was convinced of my competence and that under my leadership the project is actively and successfully developing. And then, in an informal setting, he told me such a thing:
“Ramil! I see that you can work. And if you can deliver me from all these relatives, I will give you a taste of gold. "
As I learned from the subsequent conversation, he was literally surrounded by a huge number of relatives. The chief accountant, IT director, security chief, other managers, and even the secretary — all turned out to be his relatives. But financial directors Vitaly Ivanovich hired from the side. But they were not held for long.
Time went by. Our project successfully developed, we moved forward. But one day, when I came to the reception to the general director, they simply did not let me go in there. As I learned a little later, the IT director, together with the company's chief accountant, asked my immediate superior (I remind you that I was working as a project manager on the part of the contractor) to remove me from this project, although I had almost completed the project. I didn’t like them because at several meetings I asked not convenient questions that put their incompetence on display. This cooperation is over.
And after a while I learned that in 2008 this company went bankrupt and was sold for debts. Of course, there is clearly another problem here - over-lending. But I will not talk about it, as it is from the field of finance, and not business consulting, which I am talking about. But, as I understood, without the problem of nepotism and refinancing there would not have arisen.
The CEO saw the problem, tried to solve it with the help of hired financial directors, but the relatives of the “friendly front” simply survived from the company of the objectionable specialist, and the problem was not solved until it became critical for the existence of the business as a whole.
The relatives of the director were incompetent, they created more problems for the company than they did. But even such a strong person as Vitaly Ivanovich could do nothing with them. This is the main problem of nepotism, you should not mix related (friendly) relations and business, especially if relatives and friends do not know how to leave your personal relationship “beyond the threshold of the office”, and workers - “beyond the threshold of the house”.
In general, relatives in the company are not so bad, but they are very influential. As a rule, this influence is not proportional to their competence. That is, for them your loyalty will be more important than your skills, and if they don’t like you, they will simply remove you regardless of your merits.
Effort spraying
Few parts, I want to sell cars!
I once had a client who was engaged in auto parts. It was a very successful business that began to develop in the early 2000s, when the demand for automobile parts clearly exceeded supply. Over time, the company grew, I also conducted several projects for this client and kept in touch with him in the future.
And then, as I found out, the business owner, Oleg, decided to start selling cars. He wanted to sell small trucks. He began to withdraw funds from the turnover of a successful business, took out a loan, opened a car dealership, but a problem arose: these trucks could not get a license to sell, they simply were not certified in Russia. As a result, investments have not paid off. Moreover, he had to sell a significant part of his core business, and instead of a solid and successful auto parts trade, Oleg opened a small auto service.
He was forced to sell and partially rent his retail space, and competitors settled there, which also did not help to restore the former success in the auto parts market.
In principle, the successful business that Oleg had ceased to exist. If, before trying to invest in cars, he had several outlets and 16 sellers, then after all the losses there was a small shop with two sellers and a small car-care center. Naturally, the turnover also decreased significantly.
The reason for the failure is that cars and auto parts are close, similar businesses, but, nevertheless, very different. And an attempt to embrace a new direction in which you do not understand or understand weakly, may end sadly. It is better to do what you know and know how, and not to be scattered on undertakings where you are not a specialist.
Theft
Leave it, you will be deprived of health.
Theft is a very serious problem that can lead to a complete collapse, if not detected in a timely manner. Naturally, in such serious cases it is not enough to reveal the existing problems, it is necessary to deal with their prevention. And one of the methods that work perfectly in this case is automation.
It was thanks to the project to automate the work of the warehouse that I met with the owner of the wholesale textile business owner Igor. I was hired to optimize warehouse operations. Naturally, one of the stages was the mandatory automation of accounting, which is accompanied by inventory and major changes in the scheme of the work itself.
And as soon as we started working on the project, some of the staff just quit. Imagine: 2 weeks after the start of work on the project, just before the New Year, 5 out of 18 sellers quit!
They tried to boycott the innovations, but nothing came of it, we continued to work on the project, conducted an inventory and got such a number of layoffs. In this case, three of the retired sellers were able to open the exact same point with a similar product at the other end of the city. They gradually developed and even began to lure customers.
In this situation, there are reasonable questions. Where did they get the goods from ordinary sellers? Where did they get money for business?
Why was theft present in this case? The reasons are obvious:
- Mass boycott of innovations.
- Major shortage in inventory.
- Layoffs of employees in the inventory process.
- Threats of physical violence addressed to me, i.e. addressed to the "culprit" of inventory and other innovations.
I will tell about the last case in more detail. The building was a two-story building and, on the stairs, one of the vendors, being in a state of slight intoxication, suggested that I talk. In conversation, he threw me the phrase “Why do you need it? Health is not expensive? "As I understand it, he hinted at some interested people, or rather, at himself and his colleagues. I conveyed this conversation to the head, but he did not do anything. As a result, these employees simply quit, I brought the work to the end without any problems, but the revealed facts of theft did not please.
In principle, it is possible and even necessary to tackle the situation rigidly, even at the stage of the revealed facts of theft. It would be possible to compensate for losses through the court or find another solution to the problem. But Igor acted differently. Business was actively developing at that time, the economy was booming, it seemed that all this was trifles. As a result, his complacency caused problems in his own business.
Over time, these former sellers managed to divert a large majority of customers. Due to financial difficulties, Igor had to sell part of the warehouse, and the buyers were his own former sellers. And now they are already in the role of owners, and not hired staff, engaged in the same textiles, in the same room, with the same clients.
Naturally, the people who worked in the company for more than 3 years knew everything: the customer base, suppliers, and the peculiarities of cooperation with different people, and the business itself were studied quite well. As a result, they took advantage of this information. The new competitors managed to exploit the weaknesses of Igor’s business for their own benefit, and as a result, when the economic situation deteriorated, Igor suffered in the first place. In addition, they were simply strong sellers, and having left the company so unexpectedly, they weakened Igor's business.
Investing in an unfamiliar business (Nonprofessionalism)
Who beat the hat?
At the dawn of my work, back in the 2000s, I met a rather interesting company. I had a client - a small chain of stores, which at that time consisted of 4 stores and 1 distribution center.
There were a lot of problems there, starting with the terrible resorting, when the colognes made their way at the checkout counter as “socks”, socks could be pierced as “shampoo”, etc. Many other processes were also conducted incorrectly, there was no sound accounting system, etc. etc. Then I did not understand that this is not just a lack of automation or flaws, these are all signs of general lack of professionalism. In principle, at that time I did not need to think about it. I had a clear task: to organize interaction at the information level between the distribution center and the shops. The task was interesting, in principle, I solved it.
And in the final stage, I met with the leaders, or rather even the founders of the company. My leader then told me:
“Now customers will come, you, Ramil, are working on their project, you and talk with them.”
When I first saw these founders, I immediately suspected that they were not businessmen, and not even engineers or teachers. They were strong healthy men (this is the right word to describe the portrait of businessmen), as it turned out, the oilmen, who managed to make easy money and decided to invest it in business.
During the conversation, I finally became convinced that in the business that they opened, these people do not understand anything at all. They just thought that they would invest money and everything, then their finances would generate income on their own. I remembered the only question they asked me for a long time. He sounded like this: "Whom to beat on the cap?"
Of course, my story could have seemed to someone an exaggeration, while reminding someone of the “crazy 90s”. Yes, people and times change, but the essence of the problem remains:
If you invest in an unfamiliar business and wait for the money to make the money themselves, most likely, the business will be burned.
The phrase that says that “money makes money” in business is not true. This people make money. And the money itself is nothing more than a tool.
Self confidence
I will put a cow here in the middle of the hall and sell it for an hour
I had a client who also was engaged in trade. It was a non-food wholesale and retail base, on which there were obvious problems in the work. The business owner already suspected something himself, and therefore turned to me for help. The essence of the problem was that there was a lot of goods in the warehouse. But the remnants from time to time did not match. It would seem little things. From time to time, the goods that were listed in the accounting system as being in stock, in fact, did not appear. I then told him that he was rightly worried, because it meant some problems in the accounting system, or in the program, or in the management and control system of employees.
I tried to explain to him that such “bells” is very serious. And no matter where exactly in the accounting system fails, it is important that it exists. Now, when the market is growing, it is not so bad, but the situation may change at any time, there are also periods of recessions, and the number of competitors is constantly increasing. To which he said to me:
“Ramil! Look, it doesn't matter that I trade the hosts. goods, I'm here in the middle of the hall will put a cow, and also selling it for an hour. ”
Imagine the extent to which he was confident in himself? But life puts everything in its place. And now his business has greatly decreased, in practice, the business can be considered lost. But then, when he spoke with me, the company developed, the business gained momentum.
What happened? Problems with the warehouse and accounting, he did not bother to solve. At the same time, new competitors appeared, online trading appeared, customers began to lure. And he remained at the same level of business development as he once did. As a result, practically remained out of work.
And the main reason for his troubles was self-confidence, which prevented development, prevented timely solving problems with the warehouse, and carried out reorganization in accordance with the changed conditions in the market.
How not to be in one of the pitfalls for business?
Just want to say that in all the cases I have listed, I was hired as an IT consultant. All entrepreneurs were looking for a problem not in themselves or their surroundings, not in the mistakes of building a business, but in the IT sphere. Each time, they were eager to install a new, more advanced system, buy new equipment and organize the work of the warehouse using work automation tools, make an online store, etc.
But in fact, these solutions either did not help at all, or did not help much, since the problem in all the cases listed was not in the IT plane, but in the business building system itself. Software itself is just a tool that people have created. A program is not a silver bullet that will miraculously "kill" all the problems of a business.
Software vendors are also partly to blame for the fact that businesses rely so much on automation to solve problems. But this is a separate topic, and here I will not disclose it.
And the essence of all the problems really lies in the human factor. After all, businessmen - they are the same people as everyone. They have all the same weaknesses as the rest of the people. As you can see, here I did not disclose the topic of businessmen, alcoholics, or businessmen, prone to other vices or hobbies, which are fatal. All of us and without a detailed story understand what it is and how it ends.
I had an alcoholic client who managed to build a great business, but eventually got drunk and drank it all. And everyone knows that such cases are not isolated. Now I remembered these human weaknesses just to remind: a businessman is exactly the same person, with his own weaknesses, character traits and shortcomings.
But how to deal with these weaknesses and mistakes in business? What if you are a businessman or a business consultant who is faced with a similar situation?
An example of success.
In response to these questions, I will tell a story with a good ending. Before that, I remembered only those cases where, for various reasons, I left, and the problems started after I left. I never left a falling business. And in several cases I had to help companies get out of the “pit”.
One of these companies, which turned to me in a problem situation, was engaged in wholesale and retail trade in clothing. I came to them in order, at their request, to tell about the accounting automation system created on the basis of 1C, i.e. they, like many, were looking for a solution to their business problems in the IT sphere.
It was in 2008-2009, i.e. in the midst of a crisis, and the company was going through hard times. Two founders met me (as I later learned), the first one introduced himself as the general director, the second - the financial director. But the fact that both of them are founders, I learned later. The financial director hid his current status, and refused to talk about it.
The situation was really critical. The company has already started taking loans in order to pay salaries to employees. By that time, I already had experience as a business consultant, and therefore I immediately suggested not to rely too much on the program, but first to figure out what was going on in their company. As a result, revealed the problem of nepotism. In this case, it would be even more accurate to say that the problem was friendship.
The company was created by two friends, i.e. have invested in it. They were friends from the student's bench, they trusted each other. In this case, one became the CEO, and the second was engaged in sales. In fact, it turned out that one is a production worker and deals only with this direction. The second fully took over the sale, and purposefully led the company to destroy it. As a financial director, whom he didn’t even count as a matter of fact, he lowered prices when selling and often even sold products a little lower than the cost price. And his friend, the production worker, was too intelligent (in this case it is correct to say - weak) to change this situation.
And in the midst of this situation, I came to them. The first thing we did was analyze the sales chart, the very “pie”. And there we saw that 92% of sales were associated with a company that was directly affiliated with this person. Then they tried to figure out what was going on with the sales founder at all, and found out that he was looking for premises for a new, his own company.
Of course, it was not so simple. Naturally, nobody told me about how the production worker found out about the machinations of his friend. But my numbers and his desire to understand the situation helped to understand that the company was purposefully destroyed from the inside.
For 2.5 years, with my help, this company was taken out of the crisis, the business recovered and began to develop. As soon as the company began to make a profit again, they bought a truck to deliver the goods, and the whole family (along with the chief accountant, who was the production manager's wife) went to Turkey. Prior to this, during the 2.5 years of the company's withdrawal from the crisis, the general director did not go on vacation at all, just like I did. Because a crisis in business is always very serious and requires a huge amount of time and effort, unless, of course, you want to lose the company.
How it was done:
- A problem was identified - a companion was trying to destroy the company.
- The operation was carried out to "break the cake" - sales were divided into several different parts so that it does not belong to any one company.
- There was a “crowding out” stage - employees who belonged to the old sales system and were controlled by the financial director were crowded out of the company.
- Entry into new markets. After the year it took for the previous stages, the company began to conquer new markets, opened an online store, developed new packaging, products became more competitive, etc. As a result, the company emerged from the crisis.
Thus, if you find yourself in such a situation:
- Analyze the reasons
- Develop an action plan to help neutralize the problem.
- Clearly follow this plan.
Of course, the process of taking a company out of a crisis situation can take years, in my case, a little more than 2 years. But it is possible.
In my case, it was very helpful that the CEO himself was an intelligent and gentle person, able to calmly listen to even unpleasant things, and also that the company was already in crisis, and therefore the owners were ready to accept outside help.
I hope that you did not recognize yourself in my examples, and if they did, then my method of solving problems will help you. And do not forget that there is almost always a way out of any situation. Good luck to you and your customers!
Source: https://habr.com/ru/post/289200/
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