Friday, June 15, 2012

A Tale of Three Businesses


Business One…A Success Story

Many years ago, a good friend of mine started his own business. He was a gifted mechanic, a veritable genius with screwdriver and wrench, with an ability to keep even the most finicky British roadster on the road (not an easy task to be sure). Like many successful entrepreneurs, he made a startling discovery.  As his business grew, he found himself spending more and more time in his office doing bookwork, instead of on the shop floor, where he could work his magic…and earn his money.

Now most small business owners feel that keeping their books and doing the office work is what being the boss is all about. It's not…maximizing wealth is the prime directive of any business activity. My friend did the most intelligent thing I have ever witnessed in the business world. He hired someone else to run the office so he could get back to doing what he did best. So simple, yet so effective. His business continues to thrive, and his lifestyle is the envy of many.

Business Two…Recipe For Failure

I once worked for a man, a very nice, well-intentioned guy, who had purchased a thriving going concern business where he had been second banana. The business had tons of potential, but it was a highly competitive retail operation, and problems loomed on the horizon. He was a firm believer that the boss belonged in the office overseeing his operation, although whenever problems arose, his familiar lament became “I need to spend more time down on the floor, where I can keep an eye on things.” It was spectacular insight, and he did nothing to make it happen.

Instead he invested money in technology that allowed him to remain seated behind his desk, monitoring his store through a series of cameras, and speaking to his department managers on the phone. His business decreased. In order to save money, he took on more of the tasks that kept him in his office, even if it took him longer to do them than specialists in the field would have taken. His business got worse. He couldn’t afford to keep enough inventory on hand because he had spent the money in areas that didn’t contribute to sales…or profits.

His business is closed now. His investors have lost their investment, and dozens of people are out of work. Worse, the community has lost a needed business, a former friendly business that supported its customers, the kind of place that is found along Main Street, not Wall Street.

Business Three…Know Your Strengths

Ben was a natural born salesman who formed friendships with his customers, proving himself to be a loyal and always helpful ally. After working successfully for several firms, he reasoned that the time was ripe for him to step out on his own. He had a strong grasp of the technical aspects of his business, and as I mentioned, he could sell. While he understood the financial aspects of his business, he didn’t want to waste time doing bookkeeping, which would only count the money, not contribute to making it. So he did a very smart thing. Ben enlisted the aid of his friend, a CPA, in order to take care of the aspects of his business that frankly left him bored.

Ben concentrated on his strengths and allowed his friend the CPA to concentrate on the money. His business flourished.

This isn’t a fable, but there is a moral to the story. I’m sure you can figure out what it is.

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