March 2010
Paradoxical Results
In response to the recession, one of my Vistage members, like many business owners, took on more of the day-to-day responsibilities for her business when her revenues dropped. She stayed busy and exhausted, helping her staff work with customers in addition to her regular administrative tasks. However, the harder she worked, the more her revenues continued to decline, along with the number of new customers that came in each month.
She kept up her regular e-mail retention and marketing campaign when she went home in the evenings; but she could not find the energy to make new contacts, which had generated new customers in the past. Her business seemed to be in a downward spiral waiting for a miracle to change the trend.
Through our conversations, she realized that it was too easy to stay busy working in the store and that continuing this behavior would only produce the same negative results. She had to take a risk and change her behavior. But that meant hiring another person to come into the store to do the work that she was doing, which of course scared her, because the business was already losing money. How could she afford to hire a day manager when everyone else was letting people go to cut expenses? Was she crazy?
Here’s what she did:
- Took her family on a corporate-sponsored cruise (She owns a franchise), since she thought that it might be their last vacation in a long time.
- Hired a day manager who had worked at another franchise, which had closed.
- Stopped going into the store to help with customers.
- Started exercising and playing tennis on a regular basis.
- Adopted the “Red Bucket” Strategy, of maintaining a singular business focus for 90 days. That focus was a previously successful strategy, which had brought new customers into her store, by signing them up for events that allowed them to try out her product at minimum cost.
- Limited her work to the Red Bucket activities and the administrative duties of a business owner / CEO.
- Adjusted her work schedule around morning tennis and activities with her son and husband.
- Returned to spending more time with her family and friends.
Here are the “Paradoxical Results”:
- The day manager decided to quit after one-and-a-half months, but she didn’t panic and go back to work in the store.
- Her very competent, long-time evening manager worked with her to devise a new structure that didn’t require two managers. This created a promotion and salary increase for the manager and opportunities for other employees while saving money overall.
- She has exceeded her target for new customers and increased store revenues by 40% over last year, as she’s nearing the end of her 90-day Red Bucket strategy.
- She has created a special position for one of her part-time employees: They will take on and continue the Red Bucket activities at the end of the 90 days.
- She is looking forward to choosing her next Red Bucket focus, to develop another area that will grow her business.
- And she is planning to use the “home exchange” method to take a two-month summer vacation with her family.
So was she really crazy to stop and change what she was doing?
Moral of this story: Take a look at how you’ve changed and what you’ve been doing since the recession. If it’s the wrong hole, you need to stop digging.