When business ownership goes bad…


Recently I’ve had occasion to work with a small handful of business owners who are at the end of their tether.

Typically, they’ve been in business a couple of years, employ less than 20 staff (often smaller) and are running to stand still. They are working relentless hours, every small problem at work becomes a major issue, and generally staff are causing them massive headaches. The issues at work are regularly being taken home and life is pretty draining.

They’ve created a job that causes them significant stress and haven’t planned or even thought about what sort of business they want to lead.  Often it is very much a tail wagging the dog situation.

To me, these cases really sing to my purpose in life – I’m a problem solver and an ideas generator so when I talk with clients who are often emotionally drained, unsure how to move forward and stuck in a situation they don’t have the skills to deal with, I like to step up. In essence, this is how Everest came about in the first place… I digress.

More recently, however, I’m seeing some patterns that are quite concerning and one perhaps we can all learn from.   

When business ownership goes bad it takes a massive toll. Not just on the business owner, but the staff who work there, customers, suppliers, families and the business community.   So how does this happen in the first place? There is a common storyline – either you’ve been a technical expert in the past and felt you could make some money doing this yourself, or you’ve been an employee with dreams and desires and being given the opportunity to buy into a business you’ve worked for is very attractive – right?  You know the products and services, you know the customers and you’re very good at what you do.

Stop. That does not make you a good business owner and leader. In fact, all it proves is that you’re good at one aspect of your job. Being a business owner comes with a whole pile of responsibility and accountability that many don’t appreciate until it’s often too late.   

It’s a pretty painless process in New Zealand to become a business owner: hop onto the Companies Office website, register your business interest, pay some money and voila…you’re now a business owner!

The first year or two is really scary – you might make some money, you might pay some taxes and you have a couple of advisors or friends who help you out from time-to-time.  You are likely spending your weekends sending out invoices and reconciling bank accounts to see who owes you money.  You’re working evenings to make sure you have enough jobs in the pipeline to make sure you can pay your bills and when it gets busy enough, you might start employing people.

It is at this very juncture you really do need to pause and start thinking more strategically. Specifically, thinking strategically about how you will manage and lead your staff. Employing people comes as a huge shock to some business owners who have never been responsible for other people. Quite literally it can make or break your business.

This is where you need to step up and become a great leader. What does that actually mean? The advice I often give new business owners is to start small and learn how to lead well before trying to do too much.

Firstly, make sure your business is legally compliant when it comes to employing staff. If you don’t know how to do this – ask. You can’t afford to muck this stuff up from the outset. Next, figure out what is important to you and your business and clearly communicate the “these are my expectations” and “this is how we do things here” direction to your staff (and any new ones you subsequently employ). You might want to get someone to help you document these thoughts if you’ve never done it before. Next, once you’ve let your team know your expectations and standards, hold people to account regarding those expectations. There is no point saying we’re always customer-focused, for example, and then allowing two of your staff to be grumpy every day with your customers. The message it sends is that’s OK to be grumpy with customers – not only to those two staff, but to every other team member as well. And the slippery slope starts!

Business ownership goes bad when business owners lack leadership and financial skill, are inconsistent in their behaviour and take their personal stress out on others. Of course, there are a myriad of other reasons why things go bad, but from a people perspective you must first have a sharp set of tools before you can truly run a successful business.  Invest in yourself and you will definitely reap the rewards of business ownership. It doesn’t have to be horror story that you live through every day.


About Author

Senga Allen

Human Resource specialist and managing director, Everest Group Ltd Waikato HR Specialists www.everestgroup.co.nz