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HIDING OUT, Part I

By Chuck Violand

June 22, 2015

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 common 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 preparing 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 and hoped they had made money, 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, wondering 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 business 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, not tracking quality measures or operational performance, or kicking tough conversations down the road in the hope that they’ll resolve themselves has 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 stall or you run out of gas. What’s more, hiding out from short-term performance measures may cover up longer term, more serious problems that can destroy your company.

In the coming weeks, I’ll discuss additional telltale signs of hiding out, share what some of the underlying causes of it are, and offer suggestions on how to correct it if you exhibit the symptoms or how to avoid it if you don’t.