5 Minute Biz Magic: Avoid The Ostrich Effect
Starting or running a business can be overwhelming, there’s always some task or some decision to make, and the buck stops with you. So I’m always a fan of any way to make things easier, simpler, and cost less.
When things are tough in your business – when cashflow is slow or inadequate, sales fall short or deals fail to come to fruition, or other major problems occur, it’s easy to take the path of least resistance: doing absolutely nothing. Now, there are times when a little patience will go a long way, but, as a business owner, there’s never a good time to avoid problems, or put off addressing the realities. Especially when money is involved.
But what if you’ve dug a huge money pit, and owe much more than what you can currently pay? What if an important client has cut a contract, and critical funds have dropped away? What if looking at the bank balance feels overwhelming, discouraging, and anxiety-inducing? Even in the presence of these huge financial issues, it is ALWAYS better to “avoid the ostrich effect”, and look directly at what’s going on. Dealing with financial problems by avoiding them, only escalates into more anxiety for you as a business owner, creates instability and fear for employees, and a breakdown of trust with vendors.
During my first business venture in my early 20’s, as part of a school class on entrepreneurship, I launched a quick holiday business and although revenues came immediately ($10,000 within 30 days), I wasn’t prepared to deal with inventory, cashflow, and pricing. Ultimately my decisions around pricing and inventory, combined with a vendor who went MIA and left us hanging, put us in a -$4,000 money pit, and a business model that would only continue to generate negative cashflow and losses. I came to realize that either this business wasn’t the right one for me, or I wasn’t the right one for this kind of business, but I was on the fence about hanging up my hat as an entrepreneur and getting a job, or cutting my losses on this idea and moving on to the next venture. I’ll never forget the comments my business mentor made to me, when I described the situation and detailed the outstanding payables and bills that I would need to pay off.
“$4,000? That’s not enough $ to wad a shotgun with,” he said. Well, I had no idea what that *actually* meant, but the sentiment was clear: the loss was relatively minimal, the amount was specific, and it was a minor problem. He advised me to contact each vendor individually and outline a payment arrangement, and to move forward in finding a job or getting moving on the next revenue-generating opportunity. Great advice, and I did just that.
But before his problem-solving session, the weight and fear and stress on my mind, felt immense. I had put my head in the sand, avoiding dealing with the actual situation, fretting extensively about unrelated and non-issue problems. When I sat down and looked at the numbers, consulted with a mentor, made a responsible plan of action, and communicated with those whom I owed payments, things moved forward.
Start addressing any financial business problems, by looking at a few numbers. Right now, look at your current bank account, write down all outstanding payments, and write down any sources of income. Come up with THE NUMBER that is your current big, hairy, money pit. Do it immediately, and whether that number is $4,000 or $400,000, knowing that number will cause your mind to focus on how you are going to solve the specific financial gap and get the business moving forward.
Looking at the numbers is free, it’s easy, it takes less than 5 minutes. Learning how to tackle financial problems head-on will give you peace of mind, generate trust with your employees, investors, and vendors, and help you manage the financial tasks of managing a business. By the way, ostriches actually react to fear or danger by a) running quickly, or b) kicking predators with their powerful legs. The head-in-sand response is actually a myth – even more reason to avoid this tactic as an entrepreneur!
This 5-Minute Biz Magic was written by TenX’s founder, Carolynn Duncan.
If you enjoyed this post and want to suggest a topic / problem for another 5-minute magic solution, please let her know.Posted on: March 1, 2017, by : admin