I often turn heads and provoke confusion when I refer to business as being like a bike wheel – it’s an analogy that really works well when you think about it though. All businesses rely to some extent on third-party services; whether it’s an internet service provider, a supplier or even an accountant.
Some businesses rely on those third-party services more than others – and it’s those services that come together to form the spokes in the bike wheel of business.
For a bike wheel to function correctly and roll freely, every delicate spoke must be in exactly the right place – for every business to survive you must have exactly the right companies supplying services to you. Reliability is key; if a supplier lets you down and you have no stock to sell then that’s it, the wheel won’t roll – your business will grind to a halt. Finding those companies out there who are as keen as you to keep your business going forward is essential.
In the time I’ve been in business I’ve run several companies – every company I’ve run and managed I’ve quickly realized exactly where the bottlenecks are, and exactly which service providers are unreliable. Recently I spent 10 hours sat in my office on a Friday waiting for a courier to pick up a parcel, did they come to get it? No, they didn’t. That didn’t only mean I’d wasted 10 hours sitting in my office on what was meant to be my day off, it also meant the customer I was shipping the parcel to didn’t get their goods until the following Tuesday – as I had to rebook the courier on the Monday morning.
I lost that client – I received a barrage of abuse down the telephone, and whilst it was pretty unpleasant, you have to understand why. That person was running a small market stall using a sort of JIT (just in time) stocking system. Their market stall that Sunday was bear – why? Because their products were sat in my office. For me, that was a lesson learned – and a client lost.
In business it’s easy to become complacent – take the time to sit back and think about what would happen if:
- Your internet stopped working for 2 weeks
- Your employees call in sick for a month (if you have any)
- Your accountant is late filing your tax return
They are just some of the problems you face as a business. Another recent example of an outside company letting my business down brings back particularly bad memories for me. One of my businesses, a mail order company, took delivery of our flagship product. We too operate a JIT stocking system to maximize cash flow. We quickly started sending out products from this new batch pretty much as soon as it arrived – within days we had hundreds of complaints. It was only upon further inspection that we realized the entire batch of 2,000 products was faulty. Not a single one worked correctly.
Most people would have thrown in the towel right there and then – and the rigmarole we had to go through to return the faulty goods for a refund was unbelievable. It didn’t just have a bad effect on our cash flow (we had $5,000 worth of faulty assets), it also took a lot of time up trying to secure a refund. In the end we got a full refund, but that didn’t cover the cost of the damage to our businesses’ reputation – and it didn’t change the fact that for the four months we were battling for a refund, our cash flow was dire because we had so much money tied up in bad stock.
Of course, these are just two examples of how outside businesses can let you down – there are many more horror stories out there. There are many things you can do to minimize the effect that these outside companies have on your business – and it’s true that everything can’t be perfect all of the time, so you should expect a mishap every now and then. Having the foresight to plan for potential difficulties it crucial – the road in business is never a smooth ride. In both examples I’ve cited there would be one easy remedy – get rid of the JIT stocking system. For new businesses struggling to maintain a healthy cash flow, however, JIT is perhaps the only way to go.
Those who succeed in business are those who are determined – not those who throw the towel in at the first sign of trouble. I’ve experienced everything from the examples cited above, to my bank accounts being frozen – to my postage meter breaking (which is an absolute nightmare when you’re shipping 500+ products per day). Sit down, write a list of the potential failures that could occur in your business – then look at ways you could work around these problems. Having a plan in place before the problems occur is priceless – it could save your business in the long run. Keep your business wheel rolling forward – and don’t let the bumps (or craters!) in the road put you off.