Understanding how business people make decisions is a very complicated topic. There is plenty of subject matter here to write books about, so I am going to narrow our discussion into three areas.
- Understanding how fear influences decision making and business strategy.
- How not to allow complacency to creep in.
- The Parkinson Principal and how to fight it.
As we have been traveling across the country delivering motivational and functional sales workshops there is a solemn sense of fear in most of the attendee's faces. There are not too many smiles in the audience these days.
We wish the new seriousness was due to a heightened commitment to running their business right. The reality is that most owners are petrified of the rapidly shrinking construction activity! They are being consumed by - FEAR!
Even if your business is doing well, you can't ignore the signs that so many others are in distress. Bad news is plastered everywhere! No news outlet has spared us of the gruesome details. Yes, the economy stinks to high heaven.
What is everybody afraid of?
Will they have a job? How they will survive? How they will pay their financial obligations? All legitimate concerns. But FEAR and its close cousin panic will not help you. They hinder sound decision making.
Fear is simply an acronym for False Evidence Appearing Real. Many an intuitive entrepreneurial contractor who have historically made decisions based on facts have now resorted to inferior analysis and panic-driven decisions that produce poor or disastrous results.
Let's look at how to offset the doomsday fear and minimize its impact on decision making and business strategy.
Figure out how your company is going to out-do your competition.
Figure out which financial actions will create flexibility now and in the immediate future.
Figure out which financial steps will protect yourself against a patch of bad luck without going overboard and shutting off your ability to complete jobs.
For an example of a trap to avoid, contractors will be eager to purchasing equipment because there are some really good deals out there. A classic mistake. Do not increase your fleet unless you have the sales today or in the near term to support the addition of more equipment.
Examine where are you with your marketing and sales systems. Do you have a plan? Did you scale back your investment, expectations, and projections? Are you guaranteeing a shrinkage of sales by cutting back on your marketing and selling efforts?
Deal with facts not fear
Don't project or hope for situations that probably won't materialize. Cut out excesses such as unnecessary overtime and shop time. If you must pare down your workforce, keep your very best people no matter what they cost you. You need to be able to gear up and ratchet down your human resource band-width quickly to remain cost competitive and profitable.
In the bestselling book, Who Moved My Cheese, the four characters all handle change differently. It is a quick, insightful story about change. There is one character, Hem, who refuses to leave the "cheese station" once the cheese is gone. Hem decides to stays in the empty "cheese station" and starves to death. Hem is afraid of change.
Be prepared to Move Your Cheese! Change can be good! Go through your customer files to mine golden nuggets from past satisfied clients you haven't kept in contact with. Look for markets that are still prospering.
Right now, there is a very fine line between being profitable and losing money. A single isolated event could tip your company in the red. In today's environment you MUST make sound, prudent, timely decisions.
This leads into the second phenomena; which we will call COMPLACENCY. Complacency is the opposite side of the coin from fear - but it's probably three times as deadly!