Who’s going to bail you out?

BY RICHARD DiTOMA, L.M.P.

contributing writer

Your mortgage is overdue. You are having trouble meeting your payroll. Your suppliers are clamoring for their money. Your trucks need repair or replacement. You can’t borrow anymore from Peter to pay Paul because Peter is out of money.

Why is it this way? Simple! The cause of all business problems stems from mismanagement. You might think you’re running your business correctly. But deep down inside you know you’re not sure. And you know you are not happy with the results you’re getting for your labors and investments. To make matters worse, you charge the same “going broke rate” that your competitors [who probably are also in financial trouble] charge.

The administrations of the troubled banking institutions and big auto makers obviously have mismanaged their respective enterprises. They are suffering from the same business maladies as your business on a much larger scale. If you were one of them, you could make an argument that the Federal government should bail you out by loaning you billions of taxpayer dollars to help you. The basis of the argument would be the catastrophic effect your failure would have on the economy nationwide.

Regarding the federal bailout, I can argue for it and against it. I guess, like many Americans, I’m torn on the subject. If our economy fails, we’re all in a world of hurt. If the bailout is successful it has the potential to be the catalyst which turns the economy around. “If” is such a big word.

Neither of those “ifs” addresses the real problem. When businesses are improperly managed, businesses will fail to be successful. Unsuccessful businesses may move a great deal of money. But that’s not the same as recovering costs and earning profits which are above the cost of running the business. When money stops moving, like it presently has, the excrement will always contact the rotary oscillator. The context of this subject -- that “if” comes to fruition -- is dependent upon the actions of humans who up to date have behaved in an unfortunate and absurd manner.

Greed, stupidity and fear are the root causes of the bad managerial decisions of officers, directors and administrators of publicly traded businesses. When those businesses are not truly profitable and the administrators dole out ludicrous salaries, unearned bonuses, and/or agree to labor contracts that are not proficient in order to line their own pockets and the pockets of their cronies at the expense of their shareholders, those people can only truly be perceived as voracious dolts.

When labor imposes ridiculous work rules on management and a fearful management kowtows to those demands which are actually detrimental to good sound business reasoning, labor is acting like selfish dimwits while that management can be considered as brainless cowards.

When government rules, regulations, mandates and taxing policies are disadvantageous to logical and efficient business management, government is guilty of being greedy, mindless and downright stupid.

To add insult to injury, the three stooges [management, labor and government], through their illogical behavior, have the audacity to increase the burden they place upon the taxpayers of the greatest country on earth. The continuation of these types of inane actions can only lead to the financial collapse of the taxpayer base. Where then will the management, labor and government giants of absurdity turn for bailout money?

If management, labor and government would just have done the right thing in the first place, the problem would not have been as disastrous as it is.

I’m not suggesting that businesses should lower their prices just to bring in more sales; that would be equally wrong and as disastrous if the prices were below their true costs and did not allow them to make their businesses financially strong. I am suggesting that they control their costs properly in a balanced, logical and profitable manner rather than a gluttonous and gratuitous one that kills the goose that laid the golden egg.

You are not a banking institution or a big auto maker. You’re Joe the Plumber or Tom the Contractor. Nobody other than you and your family cares if you go out of business. The only bailout you can receive comes from you. You can keep putting money and sweat into your business in the misguided hope that mismanagement will somehow miraculously turn into success. But, more than likely you will eventually run out money, and, become an exhausted and stressed out human.

You are the management of your company. In some cases, you may also be its only labor force. Yours is probably a privately owned small business. But, if you mismanage your enterprise in the same fashion as big business, you will put yourself in the same position in which big business finds itself. A position created by greed and destroyed by stupidity and fear.

In order to be fair to yourself, your family, your employees [if any] and your creditors, and to your clientele, you must strive to deliver excellence to your clientele; properly control and recover all your operational costs; earn the reward you deserve for the value you deliver; and make your business financially strong. You can’t accomplish that through mismanagement.
You can only achieve this by understanding the reason your business exists [that is to make a profit above all costs including your salary]; recognizing the problems you will face; taking the correct steps to avoid or remove those problems; and delivering excellence to your clientele.
You must set up a good business game plan that gives you an opportunity to succeed. Although success is guaranteed to no one, failure is the imminent result of those with no, or bad, game plans.

You must know the costs you incur; choose a profit margin that will help you attain your goals; and calculate and sell your services at proper profitable selling prices. When it comes to your prices, you only have three choices. That is, to sell at your cost, below your cost or above your cost. Two of those options will only lead you down the road to failure.

You must be able to address your own doubts. You must master the art of answering any questions consumers ask of you in an intelligent and truthful manner. No one trusts someone who starts off his/her responses with “homina, homina” and follows up with incoherent “bla-bla-bla.”

And, you must hire employees that have integrity; are loyal; and know how to deliver excellence to your clientele. In the service contracting business, they are probably the only representatives of your business with which your clientele has contact. Mediocre, or worse, employees give your business a bad reputation. They also tend to make your good employees become poor employees.

When your become ill, you go to your doctor. After examining you and discussing your ailment, the doctor will prescribe certain medicines and/or exercises to get you well. It’s no different with your business. By taking the proper medicine and implementing proper business protocols you can make your business financially strong and your life much more enjoyable.

If you want to stop creating your own financial problems, you must start running your business in a financially prudent manner and deliver value to consumers through excellence in performance. Today is the first day of the rest of your business life. There’s no better time to start.

If you don’t know where to start, you can call me at 845-639-5050. When it comes to this subject, I am the contracting business doctor. I’ll speak with you about that which ails your business. I’ll prescribe the medicine and exercise protocols to improve your business. It won’t hurt. It’s confidential. And with my help, if you put your nose to the grind stone, you could start to turn your business around in as little as 30 to 60 days.

You will have to take the responsibility for taking the medicine and doing the exercise. Doing things correctly is much easier and more profitable.

Remember, you are the only person who can bail your business out! I can help, but, you have to make the conscious effort to call and become skilled at the proper implementation of sound business practices. Strive to make your 2009 better than your past years.

               

Richard P. DiToma is a business consultant and contractor with 36 years of experience in the P-H-C industry. He conducts seminars, evaluates business operations, publishes customized price guides for contractors and offers continuing support.

His book -- “Solutions Management Theories & Methods for the Contracting Business” -- deals with solving pr-oblems contractors face; identifying & calculating costs; developing proper profitable prices; addressing consumer questions; hiring and evaluating technicians; and logical management procedures

It’s also available as a “Workshop On Demand” for individual businesses (from one person to multi-person businesses); contractor groups  (organized or informal); trade associations; and wholesalers to the trade.

Date: Arranged according to your schedule

Location: Wherever you wish. Richard P. DiToma will come to you -- or you can come to him. Contact Richard to find out if there is a workshop coming to your area.

His other book -- “Readily Available Pricing Information Digest 2006” -- for the plumbing-heating-cooling contractor service price reference book is available with plumbing &/or heating &/or cooling section(s). To receive more info about his services, to order his books or to contact Richard at 845-639-5050, by fax at 845-639-6791 or via email at richardditoma@verizon.net