Today I want to talk about business owners who suffer from the busy fool’s syndrome.
I’m not trying to be rude but I do mean to be blunt.
Too Many Small Businesses Fail
I don’t know what the exact statistics are but I’ve heard things like:
- 50% of new businesses fail in the first year
- 90% of businesses don’t survive the first five years
The cynic in me says that business advisors will exaggerate these failure statistics to scare people into buying advice and training.
The realist in me looks at:
- How many people I know who have started a business and then stopped and returned to employment. Or started one business and have given up on that idea and started another when I next talk to them.
- How many people I’ve seen that survive and keep out of the business failure statistics but don’t earn much money… and certainly not as much as they expected when they first started.
Why Small Business Owners Struggle
I see two problems:
- Those business owners who never get to grips with marketing and sales. Quite simply, they don’t have enough customers and clients to make the money they want.
- Those business owners who have fallen victim to the busy fool syndrome. They’ve managed to get plenty of customers but they still don’t make any money.
What is The Busy Fool Syndrome?
The busy fool syndrome happens to a business owner when they are:
- Working very long hours
- For very little success
Business success is usually defined by the money the business owner makes in salaries and benefits, dividends and profit left in the business to fund future growth.
Not always. Sometimes it can be a deliberate strategy for the business to lose money at the start to gain market share and get established. This is particularly true if there is some kind of customer lock-in that stops customers switching to another supplier when prices increase.
Why Do Business Owners Suffer From The Busy Fool Syndrome?
There are many reasons and it’s not because they are fools.
It takes hard work and intelligence to get a business off the ground and established.
Working Too Many Hours
Can the problem (working too many hours) be caused by working too many hours?
There’s a concept in economics called the law of diminishing returns.
Each extra hour spent working produces less valuable output and results.
And unfortunately, it doesn’t stop at zero.
If you work too long, you can create your own problems because you get too tired and you lose focus on what’s important. You also lose the ability to take a helicopter view and question your own actions and plans.
You can literally take one step forward and two back.
That’s why business coaches will encourage you to focus on the activities that give you the highest return on your time. I encourage you to complete your own Stop Start More Less Grid.
Not Charging High Enough Prices
Price is a very big driver of profit.
The usual rule is that if you charge low prices, you usually have to sell a very high volume to make good profits unless you pare your costs back. And if you take away services, you may not be giving customers what they really want.
It’s tough to charge high prices but the biggest battle is often in the mind of the business owner who doubts the value rather than the mind of the client.
Not Being Differentiated
As the writer of many articles about strategy and differentiation, this is one of my favourite topics.
If your business is the same as competitors, customers only have one way to make a choice and that’s who has the lowest price.
Not being differentiated can mean that you constantly have to battle on price and risk damaging, perhaps fatal price wars.
Inefficiency And High Costs From Poorly Designed Processes And Badly Trained Staff
The busy fool syndrome comes from needing to spend too much time in the business and profits being too low.
Unresolved staff and process problems will cause your costs to be much higher than they need to be and you’ll be running around putting out fires that should never have been started.
These internal issues – pillars 7 and 8 in my Eight Pillars Of Business Prosperity – are not where I like to focus on with clients but I can’t deny that they can be a major constraint in some businesses and need to be resolved before significant improvement can be seen.
Failure To Delegate
The business owner is often the only person with the knowledge and authority to put things right when they’ve gone wrong because of bad processes and inadequately trained staff.
Even when those issues are fixed, the business owner may have a huge problem delegating all the tasks he or she should.
It feels risky and many small business owners are control freaks. I know I am!
Failure To Have Thought Through Your Business Model Carefully
Sometimes business owners do a lot of the obvious things right but still find themselves the head of a business that doesn’t make enough money.
This is often caused by the failure to think through carefully how the business should be dealing with the outside world.
I use the 6 step profit formula to tactical a tactical view of a business’s strategy. It helps to pinpoint where the business is weak and where there are hidden profits that can be released quickly.
Are You A Cured Busy Fool Or Just In Remission?
I’d love to hear your story if you’ve conquered this battle against the busy fool syndrome. If you used to rush round like crazy and get home after 12 or 14 hours at work and struggle to answer the question…
“What did you do today?”
Alternatively, if you feel trapped which of the causes I’ve identified do you think are responsible for you being stuck or do you blame something else?