Latrell Sprewell is a retired NBA star who at one time achieved nothing less than rock star status. He ended up broke just a few years later, his life strewn with foreclosed homes and repossessed yachts that he had bought when the money was coming in fast and furious.
If you're successful but you don't have a plan, you can find yourself in a similar situation. I'm not saying that success is bad, but it's important to plan for it in your business and utilize it effectively. Without proper planning, success can set the stage for a financial disaster of epic proportions, even while the roar of the crowd is still ringing in your ears.
Here are some ways to keep your feet on solid ground when your business is reaching for the sky.
Keep it in proportion
People who win multi-million dollar lottery jackpots are statistically twice as likely to declare bankruptcy as people who don't play the lottery at all. This is because those lottery winners celebrated their windfalls like there was no tomorrow.
Successful business owners should learn from that. Tomorrow is always on its way, and when it arrives, it usually has an invoice to hand you.
I've seen the same business mistakes over and over again among the entrepreneurs I advise at LexION Capital. At the first hint of success, they immediately start implementing expansion plans that are as expensive as they are ambitious. The good times, they seem to believe, will last forever.
Growth is a good overall goal, but as an owner you have to consider if it makes sense right now. Ask yourself questions like, "Can I sustain this?" "Is this feasible for my company?"
If the answer is no, then you should examine what it will take to make the expansion sustainable, or if it's even something that can realistically be accomplished.
Don't take medical advice from drug reps
Every doctor takes the Hippocratic Oath, which requires that they act in your best interest.
A drug rep is held to no such standard. He doesn't care about your health. He wants your money, and he wants as much of it as possible. This is the organizing principle behind every bit of advice he offers you. This makes him a lousy source for medical advice
Many managers, advisors, consultants and others are no better. To them, all you are is a bottomless ATM that dispenses free money onto the sidewalk like an open fire hydrant.
Take the time to find someone ethical who’s qualified to handle your success. Many advisory fields have titles and certifications that legally bind them to act in your best interests, so look into that. It's worth it.
People with newfound success have no experience managing it. That's why the operative word in "newfound success" is "new." So when you're getting help from the experts, make sure that what you're getting is actually help and not something more self-serving.
Most businesses owners only plan for the future with worst-case scenarios in mind. What they don't realize is that unexpected demand also has its downside.
Companies whose sudden popularity causes a website meltdown are said to have received the "hug of death," and many "Shark Tank" businesses have failed simply because they get thousands of backorders that they couldn't fulfill after appearing on national television.
I had to stop taking clients the same day I opened the doors to LexION Capital to avoid being overwhelmed. My prospective clients were understanding, but if your clients have already spent money on your product, yours might not be.
So be an optimist. Plan ahead and you'll be able to make something great even better.