The biggest mistakes I have made in business have not been growing too fast—up-sizing—although I have done that plenty of times. In no case was the growth decision fatal. The real opportunity to make a BIG mistake is in not downsizing fast enough when things start to go bad.
There are a great many factors in business and in life that will always be beyond your control: commodity prices, competition, production problems, terrorism, natural disasters, sickness, accidents, or the economy in general. But whatever causes the slowdown doesn’t matter. What matters is that you move fast to compensate for the loss of sales and income.
Very few businesses act fast enough when, in hindsight, the writing was always on the wall.
They act slowly because (take your pick):
• They are optimists in general and expect things to get better.
• They feel a moral responsibility to their staff and keep paying them, although they can’t afford ALL of them.
• They don’t actually look at their numbers or they don’t look often enough…
• Pride, ego, or stupidity gets in the way.
• It’s easier to do nothing than act.
Do not go into debt to finance operations of an established business. Downsize and downsize fast to make expenses less than income.
Don’t ignore facts, downsize fast.
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