Have you ever been confronted with a problem that literally threatened to sink your business, burdening you with so much uncertainty that you did not know where to start?
I remember one such situation particularly well. I was given the opportunity to jump from running two businesses to all six businesses of a company after the responsible VP/GM was suddenly terminated. The owner of the company looked at me and said, “It’s all yours. Fix it.”
One of the businesses I inherited, located in another part of the country, was losing over $500K per month. Uncertainty and fear do not begin to describe what I was feeling. I knew little about the businesses I inherited and even less about what it would take to fix them. Losses of that magnitude would take the entire company down if we did not quickly stop the bleeding.
The most common reaction to risk and uncertainty is fear, which can result in many different responses. Some are programmed into our DNA, such as the “fight or flight” response which can be very helpful in some situations, but rarely in business. Others can be quite deleterious such as decision paralysis, the inability to decide and act.
“People think that entrepreneurs take risk, and they get rewarded because they take risk,” according to business leader Mohnish Pabrai, but, he adds, “In reality entrepreneurs do everything they can to minimize risk. They are not interested in taking risk.”
Business leaders, and indeed all people, face uncertainty and risk in their lives every day, as observed by Benjamin Franklin when he said, “…in this world nothing can be said to be certain, except death and taxes.” To deal with this, we buy insurance to protect us against potentially adverse occurrences; we diversify, or even hedge, in our investment portfolios; and we preferentially purchase products or services with a satisfaction guarantee.
Similarly, we seek out trusted advisors to help us reduce uncertainty in areas where we are not experts such as legal, financial, and executive search.
What did I do in the situation described above? I spent every week for several months at the troubled business and determined we needed, among other things, a seasoned full-time turnaround advisor for that business, not a resource we had ever engaged before. I hired a search firm specializing in turnaround expertise and with this added resource quickly turned the business cash positive. I then hired an investment banker and sold the business to a strategic buyer. The sale permanently solved the cash flow problem and provided a cash infusion to invest in growing the five remaining businesses.
We got past the uncertainty and the indecision. Successful business leaders know that Benjamin Franklin was right — the future will always be uncertain. But they do not let that uncertainty stop them from acting. They take appropriate measures to minimize uncertainty and then take timely action.
Greg Mickelson is a Principal of Standish Executive Search, a New England-based firm that advises business owners, executives and boards who are positioning their companies for accelerated growth, change or succession.