Losing Your Mind

All of us who are business owners know how tough it is to run a business. Most of us have long ago gotten past the ego part of owning a company. Sometimes I’m really surprised at how that affects folks who haven’t been around the block as much as I have.

I know someone who sold his business a few years back. Great little company, earning him a nice six figure income. He performed a service using a piece of expensive equipment. Like most capital-intensive businesses, his was profitable in proportion to how much the equipment was used, and it was used a lot. He hated to see it idle for even a day. He maintained a 6 to 16 week backlog. If you called, you went on the end of the line- period. If you couldn’t wait, sorry, but he didn’t shuffle one customer to please another. That worked for over 20 years.

The new owner was younger, but experienced in the industry. As soon as he took over he fired the office manager, who had done the invoicing, estimating, customer service and bookkeeping. He then began a search for a replacement, but it was weeks before someone was doing those tasks again. The administrator wasn’t bad. He just wanted his own person, because he was the owner.

He began doing favors for people, bumping them on the schedule or guaranteeing a date well in advance. He could do those favors, because he was the owner. Suddenly there were gaps in the schedule between the completion of one project and the start of another. Idle capital, lost business. Promised dates for long time customers began to slip.

The company was long known for its “no negotiation” pricing. If you wanted to use the cheaper competitor across town, go right ahead. The new owner began to do deals, because as the owner he could cut people a break and look like the good guy. Squeezed for profits, he started undercutting the competitor. Word got around that the two would bid against each other, and pricing started to suffer.

Now he is behind on his bills, in a business that hadn’t missed a cash discount in decades. He is dumping long time vendors in favor of salesmen who are promising him a cheaper deal. He boasts to customers that he plans to grow by acquiring the cheapo competitor, and thus restore the pricing stability that he upset.

Everything he did wasn’t because the business needed to be fixed. It wasn’t because the systems were broken, or the employees were bad. It was because he had to, just had to, show to everyone that he was now a business owner. He lost his mind. I hope he doesn’t lose his business.