Weathering Your Business's Midlife Crisis

Learn how to avoid common missteps during the most critical times.

A recent Department of Commerce survey stated that the average lifespan of a successful business is between 15 and 20 years, with many businesses staying the course for a much longer period. The survey also reported that a successful business weathers several critical points during its life. The authors reviewed thousands of subjects and found a definite pattern that seemed to set the successful businesses apart from their failing competitors.

The critical points are not the usual vagaries of the market—economic downturns and natural disasters—but the roadblocks that present themselves routinely when you try to grow a business successfully. The companies that managed the greatest longevity found ways to steer themselves through difficult periods and emerge triumphant on the other side. This month, I'll cover some of the big moments a business faces.

Start up

The start-up stage, one we're all familiar with, involves finding capital, identifying and developing a product, securing financing, employing a workforce, and being competitive. In the screen-printing world, this stage is a heady time when you realize that your start-up status gives you the opportunity to be a mean and lean business machine. Overhead is low, and your workforce, which most often includes yourself, is willing to work as much as necessary to get the job done. The rent is low—in many cases the shop is located in the garage where the family car used to sit—and the cost of doing business is so small that you can make a product at prices that the more established shops are unable to beat. Soon, you generate a little cash and move out of the garage into an industrial park with all the increased costs that come along with that territory. This move brings you to the next stage.

Grow the business

So you've moved out of the garage and have decided that you are really going to make a go of this screen-printing thing. This is the point in your journey where statistics say that you are in another make-or-break maneuver. You need to purchase the right presses for your needs, convince the bank to lend you the money for the purchases, and then figure out a way to make your customers stay with you and not be seduced by the guy that took your place in his garage. You are employing more staff, increasing payroll, dealing with personnel problems, and the list goes on. If you're skilled and lucky, you'll emerge from this period with a successful business. Soon enough, you are at the next challenging moment in your business life.

Maintain a manageable level of growth

Too many businesses fail at this point. How many times have you heard someone tell you that a company failed because it grew too fast? The trick to surviving through the growth patch is to take it slow, keep a cool head, and don't try to take every order you can find. I will address this particular period in a later column or two. Such is the wealth of lessons to be learned at this stage. What interests me the most in the Department of Commerce survey is the next phase.

The midlife crisis

By now your business is established. The years of hard work have paid off, your customers are loyal, you own the best presses, your staff is highly trained, and every day you are getting closer to paying off the mortgage on your building. Time for you to sit back and reap the benefits, right?

But wait—the days of double-digit growth are over. Your piece of the business that's available to you is close to being maxed out, and every day your overhead increases due to inflation, employee raises, and the cost of gas and electricity, to name a few. Slowly but surely your profits are being whittled away, and nothing on the horizon will make up the difference.

A lot of times this midlife crisis, like other midlife crises, is mollified by your decision to buy a very expensive, shiny, new piece of machinery that will somehow make up for the shortcomings of your reliable, but somewhat dowdy, workplace. It's streamlined, new, and technologically pushing the envelope, and it'll take you into a new era of success. The salesman stressed efficiency and maximum throughput, and you believed him. He is, of course, right about the need for efficiency and maximum throughput; however, the new press might not be the only way to achieve it. Before you take that giant step, take a look around and see whether you can find a few other ways to achieve extra profits without making a huge investment.

Take a second look

Many business owners haven't fully grabbed up the profits lying around their shops. Every penny that you save between the time you take an order and ship it immediately falls to the all-important bottom line and becomes a potential profit. Look at all the processes that you have set up over the years and see how many inefficiencies you have built into them. When your business was growing, you almost certainly set up your presses to handle the ever-increasing orders in a way that allowed you to get the job done as quickly as possible. This has become your way of doing business, but it isn't always the most efficient way.

Are two people doing a job that could, with a few changes and perhaps a moderate investment in equipment, become a one-person job? Could that freed-up employee fill in other areas where you can't justify a new hire? Could a few more carts make the workflow from one station to another a quicker process? Perhaps you could invest in a squeegee sharpener and reduce your high cost in inventory.

Talk to your ink suppliers and tell them that you will start shopping around for the best deals if they don't come up with incentives to keep you as a loyal customer. Look at your scrap rate and institute a program that will reduce waste to negligible amounts. Use your clout in the business to get the best prices on your raw materials, and make those suppliers miserable by pestering them all the time for a better deal. Ask your shipping manager to meet with all the shipping companies at one time and make them fight it out for your business. It's amazing what the smaller shipping companies are willing to offer to get a piece of the big guy's pie. Sounds familiar doesn't it?

Offer incentive programs that turn all of these changes into extra money for everyone. I can't stress enough the importance of making your business as efficient as it can be at this critical point in its life. We all know what happens when we neglect ourselves at this stage in our lives. The same thing can potentially happen to your business.

Once you are satisfied that you have developed the lean and mean business machine that you had when your business was young, you can buy a new, shiny press. But you might find you don't need it. Maybe it's time to let the old business tick over and look for a new opportunity to exploit back in the garage. The lessons you learned the first time around will prove invaluable to you in your second business's childhood, and the profits from your first venture can feed the needs of the new venture. Now, where did I put the keys to my new Porsche?

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