Mac Wrigley

Posts Tagged ‘Business’

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Is Your Business both Liquid and Solvent?

In Business Loans, Management, Risk on March 5, 2012 at 6:00 pm
Loans

Loans (Photo credit: jferzoco)

As a business owner, you’ve probably heard that tired old line “Banks only lend to businesses that don’t need a loan.” At times you might have even believed this to be true.  Yet businesses still borrow money from banks, which begs the question: Why would a business borrow money if it didn’t need a loan? There is a very simple answer to this question: Businesses borrow money because they need the cash to achieve a predetermined goal. That goal might be to purchase a building, another business, or even a piece of equipment. Perhaps it is a line of credit to supplement cash flow depending upon a variety of factors. The simple truth is that a loan is a tool (and not the only one) that helps a business with its cash position.

So if cash is so important, how do banks assess financial risk? In other words, how do banks determine which businesses to lend to? The answer is complicated as there are a wide variety of factors that must be included in the lending decision. The goal of the bank is to assess the likelihood that the borrower will repay the loan in cash as scheduled.

There are two basic considerations that a bank must assess when underwriting a business loan: liquidity and solvency. If a business is both liquid and solvent this does not mean the loan is approved (again, there are several other factors which must be considered in the approval process); however, a business that does not demonstrate sufficient liquidity and/or solvency might not be in a good position to borrow (as they might not be able to document their ability to repay the loan as scheduled).

Liquidity refers to a business having sufficient cash flow from internal operations to repay the loan as agreed. Repaying the loan refers to both paying interest and amortizing debt.  Solvency refers to the ability to generate cash from other sources (not from internal operations). This is most often from the sale of assets. Since this is not generally considered an “ordinary” source of cash, banks often look at cash generated in this manner as “extraordinary income” when analyzing the financial statements. In other words, this is cash generated outside of ordinary operations (Moody’s Risk Management Services, 1998).

When a borrower is both liquid and solvent, it makes sense to continue the loan process. Conversely, if a borrower is neither liquid nor solvent, they essentially lack the ability to repay the loan. In either of these two scenarios, a bank has a fairly easy decision as to proceed or not.

When a borrower is liquid but not solvent (in other words, they have sufficient cash flow to repay the loan, but lack the ability to generate cash through the sale of company assets) most banks will continue to assess the creditworthiness of the business coupled with their specific request. However, when a business is solvent, but not liquid (cannot repay the loan through cash flow from operations, but has assets it could potentially sell to generate cash to repay the loan) it is more difficult for a bank to determine the likelihood that the borrower will be able to repay the loan as scheduled (Moody’s Risk Management Services, 1998).

Liquidity and Solvency are just two of the considerations that banks must assess in reviewing a loan request for a business. Understanding these two topics is very important to any business owner because a liquid, solvent business is not only the type that banks want to lend to, they are also the types of businesses that are being successful in generating cash, which is the goal of a for-profit organization.

 

Moody’s Risk Management Services. (1998). Understanding financial statements (6th ed.). Walnut Creek, CA: Moody’s Risk Management Services, Inc..

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Do You Have a Unique Value Proposition?

In Sales, Social Media on January 26, 2012 at 7:00 am

Most of us spend our whole lives trying to fit in. In middle school, we cling to any type of social camouflage that will help us blend in and not be singled out. It’s Survival 101 during those awkward years. Somewhere along the line we outgrow this phase and seem to find our footing. However, this social pressure to blend in can hamper our efforts in business. If you’ve ever been asked the question “Why should I buy from you versus your competition?” you know all too well how important it is to be able to differentiate yourself from your competition.

There are some very literal ways we can stand out. For example, I’m tall, bald, and pasty. I stand out in almost any crowd, whether I want to or not. If you’re a business owner, chances are I’m taller, balder, and pastier than your banker. It’s become my calling card. It makes me unique and memorable.

For some, it can be difficult to stand out in a crowd. But more importantly, it can be difficult to stand out in your field. Many of us do not have a decent answer to the above question. We fall back to clichés such as “My customer service is better than theirs” or “My services cost less”. The former isn’t really a differentiator. Customer service gets you a seat at the table. If your service is poor, you’re probably not in business any longer—particularly in this challenging economy. The latter is a trap many of us fall in to. We allow our products or services to become commoditized and allow price to be the only differentiator. Often, we make this an issue and essentially teach our prospects to only differentiate on price, regardless of value.

This lack of differentiation is very common in almost any profession. If you are tasked with sales and marketing, however, this issue is of monumental importance. The real issue at stake here lies in what is known as a “Unique Value Proposition” (UVP). Your UVP is a succinct statement that tells your prospect what you do and why it matters to them. It also tells them how you are different. It can be as simple and short as a single sentence, or it may be a few sentences. The important thing is that it is clear and understandable to your target audience (your prospect or referral source) and that it sets you apart from the crowd.

I recently met with a group of professionals and discussed the importance of having a UVP. Each of us went around the table and offered up our own UVP to the group and received feedback. Most of us really liked our UVP’s but found that some changes needed to be made. We found that the best UVP’s had a few things in common.

Here are some important things to consider in crafting your Unique Value Proposition:

  1. Be clear and concise. Be careful not to use your own industry specific language that your audience might not understand.
  2. Explain what you do and why it is important to your audience.
  3. Differentiate yourself. What do you do different from your competition? Why does this matter to your target audience?
  4. Consider your UVP from your prospect’s perspective. Do they really value what you are emphasizing? If they don’t, it isn’t really a differentiator and your UVP is just a UP without Value.

Remember, your UVP is all about your prospect. It should be meaningful to them because it’s an ongoing concern for them or it should make them aware of a problem they might not have considered. It is also important to routinely check and update your UVP as your market and competition change. You may also make adjustments to the value you provide your clients. Any such changes may change your UVP.

Here is my UVP:

As a Business Banker, I provide banking solutions for businesses and their owners.

Many bankers are really just loan officers. In other words, their main tool is a loan. My clients have told me the problem with this approach is when your only tool is a hammer, every problem looks like a nail. While a loan is a very useful tool, there are also many other tools available to help businesses achieve their goals. Not every business problem can or should be solved by a loan. A banker who focuses solely on making loans views all problems through that lens.

By contrast, I am a client focused banker. I put the client at the center of everything I do. My success comes from guiding my clients to the achievement of their goals. I use a consultative approach in helping business owners resolve both routine and complicated problems and finding workable solutions.

Just as I believe not all banks are the same, I believe not all bankers are equal. What additional value does your banker provide for your business?

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Don’t Be an Oxpecker

In Change, Management, Sales on September 10, 2011 at 12:17 pm
Yellow-billed Oxpecker (Buphagus africanus), M...

Image via Wikipedia

If you’ve ever managed employees, or been a part of an organization, chances are you’ve come across an oxpecker. Almost every organization has them, and they can be a real nuisance. You might be asking yourself, just what is an oxpecker? Aside from being a fun word to say, an oxpecker is a little bird that lives in Africa and makes its living riding around on the back of large mammals (zebras, giraffes, wildebeests, etc.) and eats the parasites off them.  This might seem like a helpful bird, until you consider how they’ve also been known to dig at their hosts wounds as well. Ultimately, the oxpecker is just another parasite, albeit one who has climbed the ladder to “king parasite”. They have been blessed with the gift of flight, yet seem content to take the free ride instead.

This, then, begs the question: Does your organization have an oxpecker problem? These are the free ride/free lunch guys. In other words, those who do not take initiative, have no fire in the belly, or seem incapable of making good things happen.  In sales, these are the low hanging fruit guys. Those who might be great with what walks in the door (or eating the parasites that are right in front of them) but are not capable of finding the hard to reach fruit. Organizational oxpeckers wait for the phone to ring, the prospect to knock on the door, or some other even to happen. They don’t take the initiative to make things happen.

Sometimes, all it takes to fix the problem is for the oxpecker to become self-aware—to realize they are perceived as oxpeckers. However, most often the oxpecker has settled into this role over a long period of time. They’ve become accustomed to the path of least resistance. This type of employee can be extremely difficult, if not impossible, to turn around. The key is to take away that low hanging fruit that allows them to settle for mediocrity and never reach their full potential. If your oxpecker is in outside sales, but seems content to settle for whatever prospect calls in or walks in the door, the solution might be as simple as changing their incentive structure to disallow walk-in or call-in business that they did not develop.

Management is often the playing the role of agitator rather than micromanager. Stirring things up via change to incentives is often the most effective route to take. Managers might not be able to motivate an employee; however, they can provide an environment where in the employee might better motivate themselves.

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The Top Ten Country Songs for Entrepreneurs

In Change, Management, Risk on July 25, 2011 at 8:05 pm

#10. Act Naturally, Buck Owens

Someone once said don’t focus on money, focus on your passion, and money will follow. It’s great advice for any entrepreneur. Do what comes natural to you. Find a way to make money leveraging your skills or unique talents. If nothing comes to mind, you probably just haven’t found it yet. You are unique in your own way. Finding that uniqueness and being able to demonstrate your value to others is the first step in starting a business. Be authentic.

#9.  Standing Outside the Fire, Garth Brooks

This one was an easy choice because of the great life lesson the songs teaches the listener. Those who stand on the sidelines and risk nothing cannot criticize those who dare to take the chances. Entrepreneurs are risk takers. It isn’t that they do not value their own time, assets, families, etc. The best entrepreneurs believe in themselves and their ideas. They understand their unique value to the market. Their success or failure often hinges on their ability to communicate that value.

#8.  One Piece at a Time, Johnny Cash

This classic by Johnny Cash tells the story of an auto worker who steals a part or two every day from the GM factory where he works so that eventually he’ll be able to reassemble a new car for free. While the story is amusing, there is a business lesson as well. Businesses, like cars, are built one piece at a time. Piece by piece, brick by brick. There are no shortcuts. If you do not take the time to lay the proper foundation, to put the necessary systems in place, to plan, execute, manage, control, verify, and hold yourself and your employees accountable, you will fail. End of story.

#7.  Hard Workin’ Man, Brooks & Dunn

It goes without saying that being your own boss isn’t always as great as it sounds. If you aren’t ready to work harder at your business than you ever imagined, it is probably not the right venture for you. Remember, no investor, bank, partner, or employee should ever be called upon to believe more in your business than you do. If you are asking any of these people to take more risk than you are willing to take, then go back to #9. Do you truly believe in your ideas and your business? If so, you’ll find a way to overcome obstacles; you’ll prove to these partners that you believe by pledging your time and talents as well as your financial resources, in order to make the venture successful.

#6.  Last Thing I Needed First Thing This Morning, Willie Nelson

Can anyone sing a sad country song better than Willie? In business, as in life, things can and will go wrong. Prepare for the unexpected. You should have contingency plans for your contingency plans. If you are seeking financing and are speaking with an investor, partner, or banker, and they ask you what you plan to do if they do not finance you—you better have an answer. If that moment is the first time you’ve given thought to that question, something is wrong. Go back to #8 and reconsider your business plan. Have you thought the idea and its execution all the way through?

#5.  Everything that Glitters (Is Not Gold), Dan Seals

This song has a few different applications. On one hand, be careful with your revenues. Be thrifty and control your expenses. Many businesses find they can make money quickly and sales aren’t the problem—it’s controlling expenses.

Another way to look at this song is every idea or market niche that may seem appealing, might not be the best fit. Most businesses have limited resources: be they time, money, personnel, etc. Spreading these resources too thin trying to be all things to all people is never a good strategy. Know who your market is. Know who your customer is. If your target market is defined as “everyone”, you have a fundamental problem.

#4.  In A Week Or Two, Diamond Rio

Many a business has fallen victim to procrastination. If you have an idea or plan, implement it. As a banker, the majority of loan applicants that I meet with have good intentions, but after our first meeting fail to provide timely financial statements. In other words, if you are seeking financing (from a bank or investor or otherwise), find out what information the decision maker needs to see from you, then provide it. Be prepared. One particular business owner I met with could have saved $90,000 in annual cash flow by refinancing some business debt. By the time he got around to providing the necessary financial statements and tax returns, his business had slowed down and his financial situation had changed. He no longer qualified for the loan as he did when we first met nearly six months before. In other words, he cost himself $90,000. Think of what those dollars could have meant to his business or to him personally. Procrastination is devastating to a business.

#3.  Things Change, Dwight Yoakam

Taking a cue from the previous song, things change. In the prior scenario, the fact that the business qualified for the loan upfront was great; however, failure to act in a timely fashion subjected the business to the ever changing dynamics of the market. Sales fluctuate, seasonality occurs, expenses can increase. With so many variables in the equation, it is important to be decisive. This is not to say “run out and get a loan”. The simple truth of the matter is a loan isn’t always the right answer for every business. It is merely one potential solution to a business need. However, because things change, planning is crucial. Plan for contingencies. Perform gap analyses to understand where your weaknesses lie. Revisit your plans to gauge your level of execution. Just because you knew who your customer was six months ago, doesn’t mean you know today. Things change.

#2.  The Gambler, Kenny Rogers

I couldn’t not put this song in the list: “You’ve got to know when to hold ‘em, know when to fold ‘em, know when to walk away, and know when to run. You never count your money when you’re sittin’ at the table, there’ll be time enough for counting, when the dealing’s done.” Understanding when to take on risk and when to avoid risk is at the center of sound management. Timing matters. Don’t count your chickens too soon. Remember, things change. I know of one business that had $500,000 cash at the close of the second quarter and was insolvent by the close of the fourth quarter. Knowing when to walk away is just as important as anything.

#1.  Live Like You Were Dying, Tim McGraw

Finally, ask yourself what you would do if you knew you were going to die today, tomorrow, next week or next month. If you only had a year to live, what would you do? Make each day count. If you can make your passion your business and your business your passion, you’ll be successful. This may necessitate finding the proper partners and experts to help you in your venture. They may be partners, investors, mentors, or others. They may be your unofficial board of directors (banker, attorney, CPA, business insurance, etc.) If you believe in yourself and your idea, if you believe in your business, find those partners who believe in it too. Surround yourself with those who want to see you be successful. If your business is a startup, they can help you prepare to get things going. If yours is an established business, they can help you see holes in your strategy and opportunities you might have missed. Do all those things that will help your business be successful, but do it now.

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Does Your Business Have a “loan officer” or a Banker?

In Management on July 13, 2011 at 9:42 pm

Five years ago most banks were credit dominant. That is to say, they wanted loans. This was their focus. Every other banking product was an appendage to this singular focus. Through the downturn this changed rather quickly. Many of these loans defaulted in part to lax credit standards or the wrong type of loan used for the wrong type of client. The focus then shifted to deposits. All customers were viewed through this singular lens and every other banking product was an afterthought—something to consider if you got the deposits.

There is a dilemma in this type of banking. If you’re a business owner, chances are you have a bank. If you have a bank, chances are you have someone from that bank assigned to your account. The question then remains: Does your business have a loan officer or a banker?

If you’re thinking the two are one and the same you are sorely mistaken. A loan officer, by definition, focuses on loans. Other banking products might be offered but they are secondary to the main goal: finding loans. The problem with this philosophy is simply this: if your main tool is a hammer, every problem looks like a nail. In other words, not every business wants or needs a loan. Your business may cash flow sufficiently to qualify for a loan, but that doesn’t mean it is the right solution for you.

On the other hand, you could have a relationship with a banker. What, then, is a banker? A real banker is someone who puts the client at the center of everything they do. A banker doesn’t push deposits or credit. A banker engages in meaningful conversation, and asks proper questions so that he or she fully understands your business and the unique challenges and opportunities you face. These challenges and opportunities are unique to your business so a pre-packaged, one-size-fits-all product might not be the best thing for your business. A banker doesn’t just offer tools or accounts. A banker brings insight and relevant solutions which create advantages, but only after looking at the whole picture first.

A banker adds value and should be a trusted advisor not unlike your business’s attorney or CPA. If you don’t have a relationship with your banker, ask yourself: Why? Is your “banker” really a loan officer or business development officer in disguise? Has your banker earned your trust by giving your business the kind of genuine, individualized attention that is all too rare in our industry? Is it time you started to develop an enduring relationship with a banker who is knowledgeable at business, not just banking? Someone who can offer customized solutions to your unique challenges and tools to help you accomplish your goals? If you’re not getting enough out of your banker, now might be the time to find one who can offer more.

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If Necessity is the Mother of Invention…

In Management on January 29, 2011 at 12:22 am
Magellan Blazer12 GPS Receiver.
Image via Wikipedia

I’ve often wondered at how personality traits can carry over into business. Some of our greatest personal strengths can also be some of our greatest business strengths. The sad reality, however, is that the inverse of this statement can be true as well. Some of our greatest personal weaknesses can also be some of our greatest business weaknesses.

Have you ever known one of those people who believes their failure to plan constitutes an emergency on your part? We all know them, don’t we? They’re the person whose lack of organization constantly creates mini emergencies in their life. These seem to be the type of people who thrive on drama and always need a favor to help them in a bind. We all know such people. Many of us even ARE such people. Often everything works out fine in the end and while we may ruffle a few feathers along the way, life goes on.

But what happens when we allow this lack of planning to seep into our business lives? What possible damage can we inflict upon our businesses if we allow ourselves to ignore strategic, tactical, and contingency planning?

Sure, we may have been in these situations before and found alternatives at the last minute that made everything work out just right. But remember, if necessity is the mother of invention, then desperation is the creepy uncle.

Failure to plan will lead to desperation in your business. Desperation in this economic environment is a recipe for disaster. In our current business cycle, we cannot afford to not plan. Think of the last time you went on a trip. Chances are you engaged in at least some low level planning. Perhaps you chose your destination before hand, or booked a flight and hotel. If you drove, perhaps you looked at a map or, at the very least, packed the GPS.

The important point is that you gave some thought to the road ahead. You thought through your journey and hopefully planned for some “what if” scenarios. If you are willing to put this much effort into your recreation, does it not make even more sense to put some planning effort into your business?

It’s not too late to plan out your first quarter or the entire year. Start from the top down. What is my overall strategy for the business this year? What do I need to accomplish. Once these objectives are properly identified and prioritized, you can begin to paint in some details on the tactical level and map out measurement milestones that will help you gauge your progress on your journey. Your plan should also include contingency or back up planning in the very likely event that things don’t happen exactly as you envisioned them. In this environment, there is wisdom in having a contingency plan for your contingency plan as well.

When a pilot wants to fly somewhere, he doesn’t simply hop in his plane and take off. Among the many preparatory steps is filing a flight plan. Shouldn’t your business take similar steps so that you know where you are headed and how you plan to arrive safely?

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There is No Such Thing as a “Red Tailed Panda”

In Change, Management on July 29, 2010 at 2:57 pm

Probably the funniest thing to a zoo keeper is setting up a habitat for a nocturnal animal at his zoo which is only open during the day. The zoo keeper and his staff are all in on it, hiding in the bushes, watching us stare blankly into the cages for twenty minutes or so. They’re choking back laughter and slapping each other on the back.

None of the paying public even knows if species such as the “red tailed panda” actually exist. I actually went to a zoo once that had a nocturnal unicorn exhibit. It took me an hour or so before I realized what was going on. Apparently the unicorn was sick so he went to see the vet. Needless to say, I didn’t get to see it.

I haven’t really heard too many complaints among the zoo going public about such exhibits yet, and these are my people—parents of small children. One would think we would eventually catch on and see the farce for what it was and take our business elsewhere.

I wonder how often we have “red tailed pandas” in our businesses. Allow me to explain, I’m well enough educated to know that “red tailed pandas” do not actually exist in real life. It’s a metaphor where the mythical “red tailed panda” represents inconsistencies in our businesses.

Do we claim to have “the best customer service” then not deliver? Do we tell our employees they are “our most important asset” and then treat them otherwise? Sometimes such “red tailed pandas” are by mistake. But other times, we might be perfectly cognizant of such inconsistencies but not care enough to do anything about it. This is probably just as bad, or worse, than hiding in the bushes and laughing at those that believe such “myths”.

Someday when I own my own zoo (oh it’s happening!) all my exhibits will be clearly marked and if there is a nocturnal exhibit, the zoo will have extended hours. If the habitat has a sign that reads “red tailed panda”, well I don’t exactly know what I would do with that.

But I do know this: transparency in business is a good thing. When we do what we say and say what we do we build trust and foster meaningful relationships with our customers and employees in such a way that allows us to be successful. The absence of trust is the death march for business.

If we can eliminate any “red tailed pandas” from our organizations, we can begin to build the requisite foundation from which our core competencies can be rightfully put to their highest and best use. Doing so gives us the best chance to succeed by doing what we do best. Now if you’ll excuse me, I’m going on a snipe hunt.

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Slow! Children at Play!

In Management, Risk on July 26, 2010 at 12:56 pm

Let me preface this post by saying I am the proud father of three small children. Being small children they absolutely love to play outside. This requires either my wife or me to keep close tabs on them as they ride their bikes down our street or play out front. It can be a complicated job not unlike trying to put kittens back in a box. However, that does not excuse our responsibilities, as parents, to perform this task.

One of my pet peeves in life, as both a driver and a parent, are those parents who put signs in the middle of the road that read “Slow! Children at Play!” The signs themselves do not bother me. I am pro safe kid. In fact, I do not know anyone who would be anti safe kid.

It’s not so much the sign itself that bothers me, as it is the location of the sign and the underlying reason for it. Putting the sign in the middle of the road is sort of like saying “I’m tired of watching my kids all the time, YOU do it!” and then entrusting your most precious assets to complete and total strangers who you hope can read.

It also implies that kids should be playing in the middle of the road and cars should not drive on roads. And that the typical 25mph residential neighborhood speed limit is good enough everywhere else, but right here the speed limit should be slower. The list goes on and on. Would these same parents understand if their kids went to play at the park and someone had put up a sign that read “Don’t play here! I’m driving!”?

How busy are some parents that they trust a yellow piece of plastic to babysit their kid while they play in the road? From a business perspective there are several key takeaways we can learn. The first, and most obvious, has to do with risk management. Do we, as businesses, employ the same types of tactics? Do we use similar shortcuts that only serve to ease our minds but do little to actually lower risk?

Surely, most of us would agree that the lending environment over the past few years made such mistakes as risk was “managed” by pricing it higher without actually lowering risk. It made lenders feel better but, in the end, did very little to prevent tragedy from striking.

It’s been said that we should automate the routines in our businesses and humanize the exceptions. It is a wise practice when establishing the various systems and departments within an organization. However, do we always do this in the proper manner? I would bet most business owners could find an area within their organization where they “set out a sign” in order to automate or outsource some process. In certain circumstances this works. In others it does not. Would you let a sign babysit your child? Most of us would not, yet they still sell such signs.

Which brings me to my point, are there any “Slow! Children at Play!” signs in your business that serve to only mask risk without reducing it? Would you know it if there were? What would have to occur to make you realize it? The consequences of poor risk management can be devastating, particularly if we are blind to the risk because we thought we had that area covered. After all, I put up a sign!

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Does your Business have a Parachute?

In Management, Risk on July 17, 2010 at 2:25 pm
Tandem in freefall over Chicagoland Skydiving ...
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Crazy: adjective, -mentally deranged; demented; insane. My wife is crazy. She recently jumped out of a perfectly sound airplane. By sound I mean sound circa 1963. It took guts to fly anywhere in that rusted heap, much less jump out of it at 10,000 feet. What’s more, she paid money for this experience. By contrast you could not pay me enough money to ever participate in such an activity.

If I were ever in such a situation I have a fairly good idea of what it would look like which is probably something akin to trying to stuff a cat in a toilet. I would have all four limbs stretched out desperately clinging to the sides of the door. If you were successful in pushing me out the door you’d probably live to regret it much in the same way you would if you dunked the cat in the toilet. There is another definition of crazy: a sense of extreme unease, nervousness, or panic. I’m fairly confident I could be capable of exhibiting such behavior.

While my wife may be crazy for skydiving, she was also smart about it. She went through a well known local company, Skydive Idaho. She didn’t jump alone; it was a tandem jump where she was secured to an expert jumper. The experts had the proper equipment, contingency plans, and experience to ensure her safety and the success of their mission.

In business we all take risks. It is unavoidable, particularly if we intend to make a profit. However, the mere fact that we operate in a risk filled environment does not mean we have to accept these risks unmitigated. We must take calculated risks in order to be successful. The mere presence of risk does not guaranty a reward.

We must also bring in experts who can ensure our businesses are successful in understanding and navigating such risks. These experts may be consultants, attorneys, bankers, title and escrow officers, and other such professionals whose job it is to help us understand their portion of the transaction.

Smart businesses also have well defined and executable contingency plans. When things don’t go how they planned, they already know what they are going to do because they planned for it.  In so doing so they can also implement that plan in a timely manner.

None of us would (hopefully) ever jump out of an airplane without the proper equipment, training, conditions, and circumstances. As business owners and managers, should we not take that same amount of caution, care, and planning to ensure the success of our organizations? Failure to do so is akin to jumping out of the plane and hoping to figure out the landing situation on the way down. The statistics for surviving a fall without a parachute are extremely low. You’d have to be crazy to think that was a good idea.

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Mourning the Prior Paradigm

In Change, Management, Risk on July 16, 2010 at 8:39 am
ARLINGTON, VA - FEBRUARY 7: A truck is reflec...
Image by Getty Images via @daylife

Life is all about change. From the minute we are born we realize, on some level, our whole world just changed. Most of us quickly realize we must adapt. We look to our mother’s as our sole source of nutrients, comfort, entertainment, and just about everything. Many of us know someone who is still stuck in this stage. If you don’t, you might actually be this person.

As we progress in life things continue to change and we must continue to adapt. Some stages are more fun than others. The only constant is change. Change can often be a good thing. I, for one, am very glad I’m not permanently stuck as the twelve year old version of myself. Lanky and goofy for eternity is not my idea of fun.

There are also times we wish would last forever such as when our kids are little, cute, and still hang on our every word. Yet time marches on and change comes with it.

Often changes come that are not to our liking. Such is the case with losing one’s hair. For some it comes swiftly. For me, the evolution came much slower. And let’s face it, it is an evolution. Don’t believe me? Look at one of those evolution charts and tell me who has more body hair: the thick browed knuckle draggers on the left, or the normal looking guys on the right?

My hair loss was more equivalent to the slow erosion of a mountain. Some vegetation chooses to hold on longer than it should—as if it could prevent the change. The end result began to look like an island of thin hair surrounded by scalp. While I’ll admit it was rather awesome, and the thought of an even awesomer comb-over crossed my mind I opted to embrace the change and wear a toupee.

Okay, I shaved my head instead. While this brought some new challenges (sometimes I feel like the back of my hair is messy) it also solved a few problems. I literally save dozens of dollars annually on hair product and I never have to worry about the latest hair style.

Businesses also deal with change in varying levels of competence. Dr. W. Edwards Deming once said “it is not necessary to change. Survival is not mandatory.” I love this quote because it so aptly illustrates a point that many of us overlook. Change is not about losing what we once had. Change is about survival. Businesses that drive while only looking in the rearview mirror typically crash into a lot of things on the journey. By choosing to cling to the past, we can endanger our future.

Change is evolution. We often do not invite it, but those who learn to embrace and quickly adapt to the new reality are much more likely to succeed than those who mourn the prior paradigm. Your business’s best days may be ahead of you. Often this choice is up to you. How you navigate those waters depends as much upon attitude as it does upon strategic and contingency planning. Both are necessary components of effective management. Businesses that do not learn to manage change, choose to be governed by them.

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