‘You haven’t Suffered Enough’ – why we don’t seek advice
This article (written by Andrew Vincent), describes why business owners either don’t get advice, or, leave it too late to get advice, Andrew has spoken to business owners, accountants and business brokers to research this article and we think you’ll find some of the statistics eye opening!
Andrew Vincent is the creator and executive producer of the original TV series ‘Your Business Success’. ‘Your Business Success’ is Australia’s longest running reality TV show for growing businesses.
About a year ago I was at a BBQ with a group of friends and one of them announced he was going into business and wanted a few words of advice. For the sake of this article let’s call him John. A few of the people attending had run successful businesses and each one made the mistake of offering some advice on what he needed to do to succeed.
I say it was a mistake because everyone was met with the ‘my business will be different and that won’t happen to me’ response. Then one of the guys gave up in frustration and before walking off said “best of luck mate you just haven’t suffered enough yet! Get back to me when you have and I will be happy to help”.
I realised he was spot on. Why is it that when people first go into business they are reluctant to take on any advice? And then once they are in the thick of the day to day of running a business they are then too busy to ask for help?
Last weekend I caught up with John and I asked him how the business was going. He was busy working 6 days and sometimes 7 days a week. Then the usual story of trying to do the books at night, chasing debtors, his employees were all hopeless, not enough “good” clients, not making enough money etc. etc.
I reminded him about the conversation from 12 months earlier and he did remember the comment about “not having suffered enough”. He says he is suffering from the long hours, stress and uncertainty and wishes he had taken on a lot of the advice given. Unfortunately he was now too busy and would like to chat again about how to improve his business ‘when he wasn’t so busy’.
I think that means that he still has some more suffering to go.
What John has to realise is that the difference between success and failure for him is some basic business knowledge. He just doesn’t know what he doesn’t know.
As Albert Einstein said, ‘We can’t solve problems by using the same kind of thinking that we used when we created them.’
But why are business owners in particular so hard to help?
Is it because people that go into business are born optimists? They dream of the big house, lots of money, spare time to play golf, being the boss and driving around the BMW company car. These dreams provide the motivation to go into business but from my experience they don’t provide any motivation for people to listen and take advice from those that have already been there and done that.
So what will motivate John to start learning and doing things differently?
Is it the cold hard facts of business failure in Australia?
I have often heard the fact that 80% of small businesses fail in the first 5 years so I went searching for some supporting statistics. I found a research paper from the Australian Bureau of Statistics (8165.0 – Counts of Australian Businesses, including Entries and Exits, Jun 2003 to Jun 2007) which said that things were nowhere near the 80% failure rate; it was only 42%.
Wow, I was so relieved to read that. Then I looked at some of the actual numbers. Over a four year period 777,106 businesses ‘exited’ (i.e. quit, went broke, some sold). This is an average of 3,736 businesses per week. That is a lot of shattered dreams.
What about the lack of financial success of many business owners?
The good news was that 58% of businesses survived the first four years. But are these businesses making money? I couldn’t find any statistics so I rang some accountants that I knew that had a lot of small businesses (<20 employees) as clients.
I asked them what percentage of small business owners would be earning more money if they were putting in the same number of hours working for someone else. The responses were in the range of 50-60%. One accountant tells his clients that they should be earning what they could as an employee plus a premium of 50% for the risk and effort of running their own business – very few follow this advice.
What about making money when the business is sold?
When you tell people that 60% of business owners would make more money if they had jobs, one of the first responses is that that it is fine because they will make up for it when the business is sold.
I rang a number of business brokers and ask what percentage of people sell their business for the type of premium that would make up for all the years they earned less than they would of as an employee.
On average I was told up to 70% would get much less than they expected or need as retirement comes knocking. One very successful broker told me that the 90% of the businesses he sees aren’t even saleable. He gives advice on what people should do to improve the value of their business but by the time they have decided to sell, they are over it and don’t have the interest, desire or energy to reinvent the business.
So what is the greatest motivator for a business owner to change?
I am afraid that I have to say in the majority of cases it is a good old dose of pain and suffering. The greater the suffering, the more willing people are to start asking questions, listening, learning and then changing the business so it has a chance of succeeding.
I just hope that John makes the changes he needs too before he becomes a statistic.
What’s your strategy? Do you wait to experience ‘the pain’ or do you favour a strategy that involves learning in advance? Do you accept that your business has little value or doesn’t pay you enough or is now the time to do something about it.
- FINANCIAL PLANNING
- TAX PLANNING
- TIME MANAGEMENT
- WEALTH PLAN
- November 2020
- July 2020
- June 2020
- April 2020
- March 2020
- January 2020
- October 2019
- September 2019
- May 2019
- October 2018
- September 2018
- August 2018
- July 2018
- June 2018
- May 2018
- April 2018
- March 2018
- February 2018
- January 2018
- November 2017
- October 2017
- September 2017
- August 2017
- July 2017
- June 2017
- May 2017
- April 2017
- March 2017