Edition 468 – 7-4-5

It’s 20 years ago today. We’d been in our new home for 7 months. We had a small bench, on the back patio, up against our bedroom window. It was a lovely spot to look out over the garden and contemplate the world. Except today, the conversation was more dramatic.

“I think we’ve lost the house” I said to my wife, Trish, as she sat beside me. I felt a total failure and we were both in tears.

It had been a dramatic few weeks inside our business. As one of four partners, with 25 staff and a multi disciplinary financial services business, we’d made some bad calls.

We expanded too quickly. We took on a load of debt. We acquired another local practice that was in turmoil itself, and the integration was horrendous. We were well behind on our budget numbers, and had been so for most of the year. We had staff that were struggling – some were out of their depth. Others just needed more training, our guidance, or both.

That Saturday in April 2005 was a day of four partners, sitting down and working out a plan to save the wreck we’d created. In essence, it was the cabinet sign off of a process that had been in place for weeks. We were hopeful, but not confident. We knew some very tough decisions had to be made.

And so, on the 7th April, 2005, which was later coined by me as 7-4-5, we sat down and had to make 7 people in our business redundant. All on the one day. It was horrible and, even today, the worst day ever of my business life.

I took the lead on the conversations with each staff member, not because I wanted to, but simply because someone had to do it. I was the bad cop, delivering the news to a succession of people, one by one, over the space of a morning. I hated it for we were messing with people’s lives.

We’d sold the vision to all of these people, of where we were taking our business, and invited them to join us on the journey. Some of them were recent recruits, who’d rejected jobs elsewhere. Others had mortgages to pay and children to care for. We were now casting them adrift.

It was exhausting and debilating, for on the one hand, you’re trying to relay the information to the people involved in a manner that was caring and understanding of their own, individual situations, whilst at the same time, knowing that, without these hard conversations, we were staring down the barrel of financial oblivion.

I’ve spent a lot of time, over the years, reflecting on what happened, and why it happened. Some of the reasons:

1. Growing too quickly, always creates headaches…and sometimes heartache.
2. Everyone in the ownership and management team is responsible for financial decisions. It shouldn’t be left up to one person.
3. Having a defined business strategy is critical. However, you need to revert back to the here-and-now to ensure that you’re tweaking that, ongoing, in order to make mid course corrections, when you need to.
4. Hubris is death! When you think you’re king of the mountain, you’d better look around and check the view. You might only be standing on a mole hill…..or an ant’s nest.
5. Unilateral decisions, when you’re operating with a management team, can spell death. You need to call on the expertise in your team, to ensure you’re making the right decisions. If you think you have all the answers, believe me, you don’t.

It’s not an exhaustive list. There’s plenty more learnings. I’ve not told too many people this story over the years, mostly due to the fact that, for a long time, I felt like a fraud – someone advising businesses, who was doing a really great job of messing up their own. I’ve grown beyond that, now. Maybe it’s time to write a book about the experience, and the learnings.

This Week’s Tip

“As the years pass, you come to realise that our failures aren’t always fatal,
and our vulnerability is crucial, to helping others.”