Stupid Business Decision

JULY 10, 2011 BY GEORGE LOVATO JR
Writing books is very much a cathartic experience for me. As you will note in The Obstacle Course it is a series of personal stories that are intended to teach the reader on a number of issues related to running a business big or small. I have just about put the Obstacle Course II in the can and I am editing a final review now for the publisher. I love writing and I can tell you it gives me great pleasure. Recently however I had another experience with a client that I feel deserves to be added to the Obstacle Course II. It involves an SBD! SBD you ask? Yes, otherwise known as a Stupid Business Decision. I asked the publisher to stop the presses so I could add this story that I hope teaches the reader about how to avoid making the SBD.
Weeks of Intense Review and Analysis

Recently I was engaged by a client to restructure the balance of his company as well as add new financing. After weeks of intense review and analysis one of the solutions was to convert some short term debt to long term debt thus improving the ratios on the balance sheet and easing the cash flow burden. Along with a few other key solutions was to significantly modify the business model for greater efficiency and profitability. The branding was very strong but at an early glance anyone could see the internal operation and the method of delivery and inventory burden were outdated and expensive. After weeks of hard work, I could see the light at the end of the tunnel and I was just about complete with the short to long term conversion solution when the client makes a stupid business decision.
Close the Business

This is a business that produces millions of dollars in sales via a very sophisticated website. The top line is very impressive but the bottom line is very weak. Hence the need to modify the business model. That part of the project was in progress. The new model integration included a host of generally accepted business practices used by almost every internet based company. I was just about to drill down and then the client decides to close the business. Yes close the business. I was stunned. I pleaded with him not to do so. But the client was tired and did not see the forest for the trees. His emotions assisted him in making a stupid business decision. After some discussion I convinced him there was another alternative. Sell the entire package. He agreed. Now I am off to sell the entire deal kit and caboodle.
Now I Have a Business to Sell

It sounds strange I know. It sounds unbelievable but it did happen. Emotions and not wanting to adapt to a new business model were the driving forces behind this decision. He was worn out and he could not buy into the new more progressive way to run his business from the bottom line rather than the top line. Many of his business, internet and operating theories were just wrong or simply outdated. His belief in these skewed ideas also lead him to the SBD. Many things would have been required to change the business model and they were all achievable but he remained resistant. He had a tremendous amount of critical mass to work from but he was simply in love with his old and outdated way of doing things. I could not convince him otherwise. Now I have a business to sell. Not the best option but surely better than just shutting it down. So if you are interested in buying an internet business with a history of producing millions of dollars call me.
How to Avoid the Stupid Business Decision

The Stupid Business Decision. It happens. And when it happens it can have devastating effects on you, your company and everyone around you. Emotions are the key fuel to this fire. How do you avoid the SBD? It is simple. Stop! Listen! And above all bring in people around you to help you fully analyze every move you make and every decision you make when you feel overwhelmed by the environment around you. Follow your gut and not your emotions. There is a very big difference. No decision you make quickly can ever be the best one.

Does Your Business Deserve Financing?

Weeding Out The Poor Business Model
I listen to the average business man every day talk of the difficulty experienced in obtaining capital. In most cases I can see that the enterprise they are speaking of does not in fact deserve the financing sought. Continuing losses, bad business decisions, poor judgment, and a host of other reasons why funding is unobtainable. The market has a way of weeding out the poor business model.
So Few Find Needed Capital at the Prescribed Time
In some cases the needed capital sought is in fact deserved. But it is a rare thing indeed. For those enterprises the principal must endure days, months or even years to find the right financing solution. That is in fact part of the test. So few find the right match out of the shoot. So few find a steady stream of needed capital at the prescribed time.
Always Assess the Business Model
The rule of thumb is to always assess the business model. If it is not profitable after a year or so then either adjust it to profitability or move on. Not every idea can become a successful enterprise. Not every business model can be profitable. Not every opportunity can be converted into a going concern. Not all of us are meant to run our own business. Put it all together and you need to asses not only the model but yourself. The two must fuse perfectly in order for the model and you to thrive. Analyze, assess and examine all the factors before you continue your quest to run you own show.