Over 80% of all new businesses are gone within 4 years. Often the decision that kills the business is taken in the early stages, and the efforts to correct this mistake are never enough to overcome it.

Most of the time, the problem starts with a small decision that seems to be part of day to day management, and ends up being the 800 pound Gorilla that knocks the business over. This decision can be anything from placing a single ad to choosing what printer to buy for the office. Small and seemingly insignificant decisions that prove to be anything but small or insignificant down the road.

I saw a company go from a steady growth to being out of business in just over two months because they chose a cheap printer. When the printer failed late one Sunday night when a lot of printing was needed for a very important presentation on Monday morning, there was no time to correct. They had spent a lot of money on the event and had no way of recovering.

Two seemingly small errors, buying a cheap printer was one, the more serious one was allowing things to get that close to the finish line without sufficient backup plans. As much as we would like to think that this is the exception, small businesses are notorious for cutting deadlines way too close.

Being flexible is only good if you can stand firm too

Small businesses make these mistakes because they operate in the “flexible range”. One of the great strengths of a smaller company is its potential to adapt. This however often leads to changes being commonplace, which is never a good idea. Always changing to match the present is a reactive approach, always keeping the company behind the curve.

The key to avoiding these mistakes is to always make decisions for the long term. It’s known that successful business people are often quick to make decisions, and slow to change them. This might sound counterintuitive since a business person has to be adaptive to their environment, but the simple fact is that the short term environment is much too volatile to base your decisions on.

Being slow to change a decision means that your decisions have time to come to fruition, Making long term decisions and sticking with them until you have enough data to see whether it is the right one is the only way to ensure long term success, changing every time the wind does is an extremely expensive way of doing business.

Count to Ten (thousand)

You make long term decisions by stopping yourself from reacting every time something seems to be wrong. The “problem” is a marker, a heads up that this is an area that you should keep an eye on closer, but you should never make a decision based on disturbing news on a Monday morning. That’s the time to grab a coffee and talk to people. Try to hash out what this really means, Is it a trend change, or just a bump in the road. If you are prone to reacting quickly, you will make decisions based on too little information.
If you really think that a change is needed, it’s time to pull out the whiteboard and consider what that change will mean to all the other aspects of the business. Run through what the immediate effects of a decision are, and then try to see if you can predict what impact each of those effects will have for the future. Do this as a rule whenever you are considering making a change or a decision.

After a while, you will become better at seeing the long term, and that alone will put you ahead of the curve, the main idea is to slow yourself down to acting on trends, not just little bumps.

Don’t be so firm that you lose customers

There is one definite exception to this rule, make quick decisions when it regards correcting a customer’s negative experience. If the customer is displeased, you have a very limited time to make a difference. This is a now or never situation. And unless you are running a business that gets a lot of complaints, taking the hit and improving your customer relations is almost always the best choice. Because you are dealing with relations, this is in fact a long term decision.

As an example, think of a restaurant that you no longer go to because you didn’t like something there, maybe it was the, service, maybe the food itself. Fact is that since you haven’t been there for a while, you don’t know if it is anything like what you remember.

The restaurant could have fixed the problem the second you left the last time. You still just choose another place when you need to pick a restaurant. They have lost your business, regardless of what changes has been made since. Not only has their corrections not brought your business back, they have also lost your references. You aren’t going to recommend this restaurant to anyone simply because you have a bad experience from it.

Now imagine that the restaurant corrected the problem that turned you off the second you walked out the door. Think about the effects of losing you as a customer. Over the course of one year, you might have eaten there four times, and told five people about it, who each eats there four times a year, and tells five people etc…

If the above is true, each customer eats there four times a year and converts five more people to do the same every year. The total effect of turning you off from that restaurant is 18,748 customer visits in five years. Just ballpark that the average tab is $30, that comes to a total lost revenue of about $560.000 over those five years.

Would you rather lose the $30 tab, or the $560,000?