Success Makes Entrepreneurs Stupid!

This at least is one of the theories why good businesses begin to flounder. You worked hard to get to a profitable position in your business and believe it is time to relax - all is well, and than “bang”.

A few years back I helped a business that used to be successful for a number of years and made good money. Then the owner decided to hand over most of his responsibilities to somebody else, from then on it was downhill all the way. The business was doing so well that they neglected to do cash-flow planning and basic business planning, so when I arrived and did the numbers they had lost over $1 million in about three years. Believe it or not they did not understand what was happening.

What was happening was that customers were deeply unsatisfied and began leaving in droves. Nobody had paid attention to the customers for all the time since the owner had left.

The moral here is to make sure you hand the business over to people who understand that customer care is more important than a great product. As I said before “People buy from People”, remove one side without a reasonable replacement and you lost the business.

The owner came back and it took him three years to get his business back on track, now he is selling to retire. ST.

3 Responses to “Success Makes Entrepreneurs Stupid!”

1. Robert Moore
   http://www.business-sale.com
   
   Said on November 28th, 2007 at 5:18 pm

   That old one. Neglecting customers. I know of a business that had one big client (Sainsburys) and lots of smaller ones. They spent time and effort nurturing the smaller customers because that is where they saw the growth coming from and then Sainsburys left them without warning, probably because they felt they were being neglected…. Business subsequently went into receivership.

2. Rebecca
   http://gowholesale.com
   
   Said on November 29th, 2007 at 8:05 pm

   It seems so obvious doesn’t it? And yet at the same time it’s not surprising that this is such a problem. It’s easy to overlook this aspect when you are trying to remember everything else. I think this is something that you should make a habit of reminding everyone about every so often. Great advice!

3. CatherineL
   http://www.cathlawson.com/blog
   
   Said on December 4th, 2007 at 10:38 am

   Stefan - that is terrible. He undid all your hard work.

   I guess books like the Emyth encourage people to build a business that could run without them, but an awful lot of people leave before they’re at that stage.

   And having a business that can run without you doesn’t mean you can ignore it completely!

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