Most of the challenges business owners face as they grow their companies can be traced to a handful of entrepreneurial behaviors they bring to their companies.
Whether it’s the quality of the products or services we pro-duce, our competitive position, employee turnover or even the financial performance of our companies, drilling a little deeper into these problems frequently reveals that these are merely symptoms of their under- lying behaviors. Trying to correct these problems without addressing the behaviors that led to them is a losing battle. The problem appears to go away at first, but it usually resurfaces later.
This two-part series addresses one of these entrepreneurial behaviors: hid- ing out. We first explore some of the symptoms and underlying causes of an owner or employee engaging in hiding out. In Part II, we discuss the conse- quences and offer suggestions on how to overcome the behavior if it exists or how to avoid it if it doesn’t.
My introduction to the concept of business owners “hiding out” was early in my consulting career when I was working with a commercial construction contractor. This particular contractor had tons of trucks and heavy equipment and dozens of employees. Being in commercial construction in a northern climate, their season pretty much wrapped up by early December. As is a com- mon case with construction, their cash flow always felt like it was flowing out rather than in, and their margins were paper thin. To make things worse, they never tracked their numbers throughout the year. It wasn’t until the end of the year, or even the beginning of the following year (when they were prepar- ing their taxes), that they looked to see if they had made any money!
As I worked with more and more companies and their owners, I discovered this behavior was not all that unusual. When I’d ask to look at their financials, I’d hear comments like: “Oh yeah, we’re still working on them” or “We haven’t closed out last year yet” (and this is in June). In some cases, I’d just get blank stares.
The owners who were hiding out had worked like crazy all year long, flying blind until their accountants, after preparing their taxes, would announce whether they had made money that year or not. Regardless of the verdict, the owners were never pleased. If they lost money, they would be emotionally crushed, wonder- ing how they could have worked so hard and not made any money. Then they became stressed, wondering if they would still be in business the following year. If the news was good because they had made money, the owners’ responses weren’t much better: “If I made all this money, where is it? Where’s the cash?” they’d cry. “And now the government wants their cut?!” There was just no winning.
Avoiding the financial performance of our companies is just one of the ways business owners play a sophisticated game of hiding out. We do the same thing when it comes to confronting people about performance issues or busi- ness problems. In some cases, we try to explain away our behavior by telling others that we’re not “numbers guys,” figuring this gives us a pass on tracking critical numbers in our companies. Or we say “I’m a nice guy,” as if we have to choose between being nice to people and being firm.
Hiding out from the financial performance of your company or kicking tough conversations down the road in the hope that they’ll resolve themselves have the same effect on your company as driving a car with the dashboard gauges covered up. You can only operate this way for so long until something is going to break down or you run out of gas. What’s more, hiding out from short-term performance measures may cover up long-term, more serious problems that can destroy your company.
I’m sometimes asked: “How do I know if I’m hiding out?” The visible symptoms are usually pretty easy to spot: confused expressions, making excuses for not having important information such as financials or denying that they’re important in the first place.
Other symptoms can be even more conspicuous, such as closing the door to your office to avoid having to deal with people or business issues, not getting back to an irate customer for fear of getting yelled at, or leaving important business documents unattended or buried under piles of papers on your desk. Other symptoms of hiding out can be a little harder to identify.
We major in minor things. When we want to avoid making tough decisions or addressing uncomfortable issues, it’s easy to wrap ourselves up in the secure feeling of being busy, even if our busyness mostly involves mundane tasks that bring little value to our companies or our customers.
We engage in analysis paralysis. Don’t confuse this with paying attention to the details or doing your due diligence before making a decision. Taking care of details and researching potential hazards can be critical to success. Analysis paralysis involves endlessly obsessing over inconsequential details that will not measurably contribute to the value of a decision. It just lets us delay making one.
We fail to measure performance. I’m talking about front- line performance as it relates to every area of your business: administration and accounting, sales and marketing, operations, employee turnover and retention — even figuring the true cost of producing your product or delivering your service. You won’t stay in business long if you’re losing money on everything you produce while deluding yourself into thinking that you’ll make it up in volume.
We default to familiar activities. Sometimes the growth of our companies forces us into positions we’re either ill-prepared to perform or we’re just not comfortable doing. To avoid this, we occasionally resort to performing jobs or engaging in activities with which we’re more familiar and comfortable. Sometimes this even includes duplicating work we’ve hired and are paying someone else to perform. But it lets us hide out from the newer responsibilities that we’re trying to avoid.
We avoid confrontation. Many entrepreneurs are confrontation avoiders. We like doing nice things for people and we want people to like us, so we avoid being confrontational. Frequently, this hurts our companies and sometimes even the people we were trying to avoid hurting. We become experts at wrapping highly emotional issues up in tight little packages and keeping them hidden where we think we don’t have to deal with them. Most of the time, though, these issues continue to eat away at us, gradually eroding relationships and businesses.
When it comes to the underlying causes that lead to hiding out, some of them run deep and can be difficult to identify. I’ll start with one of the easiest to address.
Lack of knowledge. We don’t know what we’re sup- posed to measure or how to address difficult situations. Key Performance Indicators (KPIs) are used to measure activities or important benchmarks in business. While there is no set number of KPIs in any industry, every industry has a handful of them that are crucial to efficient business performance. These ultimately lead to a company’s growth and profitability. KPIs exist in every area of the business. It’s critical that an owner learn which are important to the profitable operation of his business and work together with his or her leadership team to achieve them.
Addressing difficult situations where you have a lack of knowledge can be a little more challenging because it involves the characteristics of the person doing the addressing. Some of the best advice I’ve heard on this subject involves placing the facts surrounding a contentious situation on the table, not under it. This forces the facts to clearly face the light of day where everyone involved can discuss them openly. Hiding out from the facts never solves anything. Keeping things bottled up inside only allows for one-sided conversations, frequently breeds resentment and rarely has a positive outcome.
We avoid the measurable. It’s one thing not to know what needs to be measured in a business. It’s another thing altogether to be aware of them yet hide out from doing so. It’s only natural, since many business owners avoid confrontation, that they would also avoid measuring KPIs. After all, measuring something implies doing something about it if it doesn’t measure up. So, by not measuring, we’re able to side step the unpleasant task of confronting someone or something about unacceptable results. Of course, simply avoiding something doesn’t make it disappear.
Weakness. Perhaps the great bard, William Shakespeare, stated it best when he wrote: “Fatigue doth make cowards of us all.” Running a business can be exhausting. Long hours and infrequent breaks can wear down the most energetic business owners.
Physical fatigue is only one form of weakness that causes us to hide out. An even greater cause is mental and emotional fatigue. When you’re the owner of a business, all the decisions within your company ultimately come back to you. As a business grows and the owner finds himself in unfamiliar territory, it’s easy for him to question his competence. Similarly, when a business struggles for survival for an extended period of time, the mental fatigue can be exhausting.
Many of us learn early on that we’re better off not making decisions or having difficult conversations when we’re tired. While this philosophy might serve us well when it’s used occasionally, defaulting to it as a strategy to hide out from important decisions will eventually take a toll on our companies.
Adding to the list of underlying causes of hiding out are fear of the unknown and fear of the known. In other words, to avoid the consequences acting on these fears may produce, we hide out and do nothing.
Fear of the Unknown. I’ve often commented that, as our companies grow, we as CEOs, and frequently as man- agers, are constantly facing challenges we’ve never had to face before in our businesses. This can be scary. The financial, competitive and employee complexities of larger companies are different and frequently more challenging than the ones we faced when our companies were smaller. Even for owners with advanced degrees in business, the challenges they face when the bullets start flying in the real world are different from the ones they studied in the classroom. These challenges can be intimidating — sometimes intimidating enough to cause leaders to hide out by doing nothing or by retreating to the comfort and security of their smaller businesses. Even conversations we have with ourselves can become debilitating: What if I confront my employee and he quits? What if I check my income statement and see we’re losing money? What if I call my customer and she tells me she’s unhappy or isn’t going to pay me? Sometimes we choose to hide out and do nothing rather than face these unknowns.
Fear of the known (or highly suspected). Knowing the things we’re supposed to be measuring or the decisions we’re supposed to be making is one thing. Actually doing those things is another. Sometimes, we’re fully aware of the expected outcomes of the business decisions we’re about to make, yet we deliberately choose to hide out from making them. While choosing not to make a decision is actually a decision in itself, hiding out from a decision and not letting anyone know what’s going on isn’t. RIA