Millicent called me with unusual urgency one evening, asking for a meeting at my earliest convenience. She told me that she felt that she was approaching a breaking point. Her business had been continually under-performing and draining her energy.
She told me we have not met before but a friend strongly recommended she talks to me. I immediately consented a meeting the following day.
Experience has taught me that most urgent calls from clients are emotionally driven and if not acted on urgently, you lose the client.
Barely five minutes after her call, I received a call from Anne, one of my clients telling me to expect a call from her friend Millicent.
“I recommended her to talk to you because she urgently requires assistance to fix her life, not her business.”
“What do you mean by fixing her life?” I asked Anne. “You see, Millicent thinks her problems are caused by her business problems but in reality her business problems are caused by her personal problems.” I tried to digest that.
The following day I met Millicent in her office. I purposely fixed the meeting in her office so that I could peruse her business model and talk to one or two of her employees.
Just as Anne had hinted to me, I realised at a glance that Millicent’s business was very profitable. In fact, her profit margins were very impressive and her operating costs were well contained. So what was the problem?
I queried non-business withdrawals and expenditures and she was speechless.
After a two-hour discussion, I made a great breakthrough, the shortest in my professional life: her spending habits, not the business, was the problem.
Not many entrepreneurs readily admit that they are a liability to their own business.
Millicent did and this paved the way to start addressing the real issue: her personal finance weakness.
Most problems that face majority of small businesses are caused by poor personal finance management on the part of the owners.
Uncontrolled personal withdrawals can cause cash hemorrhage in any health business. Business owners should regard themselves as employees of their businesses and earn a regular salary.
Therefore, when you withdraw more from the business as Millicent did, you are likely to weaken the entity and blame various things such as poor sales, bad economy or even employees.
Most people start businesses with unrealistically high expectations that it will solve all their financial problems. It may not, in the short term.
Be bold enough to put a red line between your money and business money.
This article was first published in the Business Daily on 15 May 2017.