THREE WAYS TO FAIL FROM JUST ONE FAILING!

Many blogs address how to succeed in business but many small business owners -and others as well - are as motivated by the fear of failure as by the drive for success. In this year's Leadercast sponsored by Chick-a-Filet, Jim Collins, author of "Good to Great...Why Some Companies Make the Leap and Others Don't", pointed out several ways to ensure failing in business. His observations are perceptive and are of value to all, but especially so to leaders who are already succeeding:

1) Success can frequently lead to hubris. Since leadership is most sustainable when it includes a good deal of humility on the leader's part, the reverse is equally true and in every sense must be avoided. Hubris can lead to emotional decision making of a disastrous nature!

2)Once successful, many executives seek to accomplish and attain MORE. What specifically MORE is is almost less important to them than its attainment: more sales, more products, more recognition, more whatever, just MORE! This pursuit can drive a company to abandon the very disciplines and thoughtful analyses that led to its success.....all in order just to salve the owner's or CEO's ego. BEWARE OF EGO!

3)A leader can be carried away by his or her success and deny or fail to act upon new risks and dangers which may emerge. Sometimes facts are discomfiting and do not want to be faced or even acknowledged. If one's ego is too inflated, the risk of not confronting new, disturbing facts which must be faced honestly and confidently can lead to crises. BEWARE OF HUBRIS AND EGO!

These two closely related factors, hubris and over-inflated egos, can clearly be dangerous which is why Collins emphasizes the importance of leaders retaining a large sense of humility in the way they run their companies.

WANT TO RAISE PRICES? ANTICIPATE WHAT YOUR COMPETITORS MAY DO!

There has been a spate of articles recently providing advice to businesses able - or, at least wanting - to raise prices as the general business climate has seemed to be improving. However, none of those I have read have addressed the competitive issues one must think about when comntemplating an upward move. It is worth doing.

For example, let's assume that you and your prime competitors are priced equally at the point of sale. What will your prime competitor do if you raise your price by 10% at retail? Will he follow suit? Perhaps he will only come up half-way, thus end up underpricing you. Are you happy? Will the added profits you anticipated fail to accrue as your revenue falls in light of his undercut? Can you then cut back to his level.... should you?

The point I want to make is not to provide solutions to competitive responses a la the example above, but to advocate doing some simple planning in advance to project what your increase would yield under differing reactions by your prime competitors: if he matches you; if he holds his current price; if he only goes half way and your volume is affected; and so forth. Assume and assess what you would do if the situation were reversed.

Today, there are simple models available to assess all such variations in advance and, while they will cost you a bit of money to employ one or two, the long run benefit is worth the upfront price.