You know that clichéd saying, “If you look after the pennies, the pounds will look after themselves”?
Benjamin Franklin made the same point in The Way to Wealth, with the old rhyme about a horse and its rider:
A little neglect may breed great mischief; for want of a nail the shoe was lost; for want of a shoe the horse was lost; and for want of a horse the rider was lost.
Benjamin Franklin, The Way to Wealth (1758)
All of it for want of a little care about one nail. Every business has its nails, and they’re usually small enough to ignore.
“We roughly break even”
I remember one business owner I was coaching. When I first started working with them, I asked to look at their numbers. They told me they roughly broke even. I asked what that meant, and they didn’t really know, other than the fact that their bank account looked about the same every month. In reality, it didn’t.
When I sat down with them and looked at the numbers properly, the business had been in decline for quite some time. It was losing a couple of hundred pounds every month. Only a couple of hundred pounds, which is why the bank balance at the end of one month always looked about the same as the month before.
To give you some context, this business turned over north of £50,000 every month, so £200 by comparison was tiny.
A leaking bucket
The loss was so small it was almost like it wasn’t there. But imagine a leaking bucket. Leave it long enough and it will eventually empty. That’s exactly what was happening in this business until someone drew attention to it.
Turning on the lights
When I first put the spotlight on it, the business owner found it scary. They said it was like there was a monster hiding in every corner of their business. I said, “Yes, and all we’ve done is turn on the lights so you can see those monsters.”
Can you guess their response? “Can we turn the lights back off?”
Thankfully they didn’t. You know what happens when a problem is ignored. The monsters in the corners are left to feed, grow and become bigger monsters.
By putting attention on those numbers and looking at them consistently, that business went from making a loss to making a profit. Then it went on to make five figure profits every single month, consistently, and in a fairly short space of time.
Where are your nails?
Of course, money isn’t the only place a business can have small leaks. It could be something in your company culture. It could be part of a process that’s being missed or overlooked. Ultimately, though, the place they show up is on your bottom line.
What hidden problems are in your business right now? What do you need to do to find them? What do you need to be paying attention to, and when are you going to start?
