Learning the Hard Way
I am a sales and marketing guy at heart. Those are my strengths. Topline growth almost never concerns me or intimidates me. I know how to grow. I have figured out ways to get more work than we can typically handle, which over the last 10 years or so has forced me to keep growing capacity. Bigger buildings. Bigger staff. It has also allowed me the opportunity to figure out what aspects of running a shop I like the least, package them up into a job description and either hire or outsource those roles so I can focus on the fun stuff that I know I’m good at.
Over time, however, this has created huge vulnerabilities. One particular area that has proven over and over to be my Achilles’ heel is finances. Like most immature sales and marketing guys, I figured over the years that if I just kept growing sales, the net profit would take care of itself. Or if I just hired the right accountant or bookkeeper or consultant—basically if I just threw enough money at the problem—it would go away. Well, it did not go away. And this year, we started to hit a wall.
Most of us have hit walls in our personal or professional lives, and at the base of these walls are a collection of horror stories full of pain—or what we call it when we get on the other side of it, “life lessons.” But before they are lessons, they are painful.
That’s right where I find myself today. In the middle of a painful chapter. Suddenly this year, it felt like our bills got harder to pay on time. There were a couple of close calls on payroll. Our net profit was way down. When that happens, the best place to turn is to your books. Check the profit and loss statement, right? So I went looking for the books and they were nowhere to be found. I thought my accountant was keeping track of that. He thought our bookkeeper was keeping track of that. Turns out no one was really owning that role. On top of that, we had recently added management software and it turns out the numbers were not coming through between the software and the books properly. Evidently we had not set the two systems up to communicate, so no one had accurate information. There were several people all on different islands inside my small company wondering who was going to fix it. I had no idea where to even start.
But what I did know was that more sales and marketing were not going to rescue me this time. We grew consistently over our first 10 years and we had very little to show for it. Sure, nobody, including me, ever missed a paycheck. We had been generous along the way to our team and our community. All of our bills eventually got paid. But there was and still is a trail of money that just leaked out over the years. You know how some people say they left money on the table in a deal? Well, for us, it felt like our money never even made it to the table. We had just leaked money all over the ground. I had to find and fix the leaks. Otherwise, no matter how much money we made, it would just keep spilling everywhere.
We have set out to tackle the issues in a number of ways. For instance, we realized from our initial research that a good portion of the leakage was in how we handled and processed parts. Previously we had a part-time parts manager. We moved him to full time and beefed up the accountability on parts through a new job description for him. We also separated the physical side of parts (receiving, inventory, handing out to techs, etc.) from the invoicing and paper trail side (invoicing into our management system, and following up with vendors on returns and credits).
My dad, who also runs a shop, has warned me for years with one of his favorite pithy sayings: “It’s not how much you make. It’s how much you keep.” In other words, it’s not about the top line, it’s about the bottom line. Retained earnings. Net profit. Something to show for all this work beyond a paycheck.
So this month’s column is a cautionary tale of sorts. It’s my confession that over-depending on a strength is actually not good and may be covering a serious problem somewhere else. It’s also a recognition that delegation can turn into abdication if things are not handed off well. A good handoff includes clear expectations, in writing, and boundaries and check points along the way. In the end, it’s a siren to all of us to, yes, work within our strengths, but also pay attention to areas of weakness. Don’t shy away from them. Be honest and ruthless about making sure those areas are covered by competent people who have what they need to get the job done. Don’t assume it will all just come out in the wash. What might come out is your net profit.