Small Business Failure

2022 Prediction: Small Businesses will Fail at Historic Rates

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The Pressures of Low or Negative Margins and Employee Turnover will Create a Downward Spiral for Many Small Businesses

Small Business Failure

The combination of inflation, poor first-line leadership, and expensive mistakes spell trouble for low-margin small businesses. I think we will see small businesses fail at historically high rates in 2022.

Inflation of 4 percent or higher will persist due to supply chain challenges and demands for higher wages. The Biden administration’s Build Back Better initiative, if it passes, will heighten inflation even as it invests in (hopefully) high-payoff programs. Inflationary pressures are going to reduce margins. In some cases, small businesses could find themselves completing projects and selling products at a loss.

The so-called great resignation will continue because COVID has reduced people’s tolerance for poor leadership, toxic work environments, and poor work conditions. Some people are leaving their jobs to upgrade their skills and enter new lines of work. Most seem to be switching jobs within their current industries.

The best talent will find their way to companies that have good leadership, healthy cultures, and quality work environments. Provided that these companies can innovate successfully to outpace inflation and higher costs, they will thrive in an upward spiral of better talent, higher quality products and services, and greater continuity.

Business Failure
Small Business Failure

The pressures of low or negative margins and employee turnover will create a downward spiral for many small businesses. CEOs will work longer hours and get consumed in problem-solving, which heightens the risks of expensive mistakes. They’ll lack the bandwidth to innovate, so the margins will continue shrinking until the business is no longer sustainable.

You cannot do much about inflation (except raise their prices), but you can take these steps:
1. Fire managers who are driving employees away,
2. Invest in leader development so that you attract and retain great talent,
3. Reduce the likelihood of expensive mistakes by having trusted advisers who will help you avoid falling in love with your own plans and getting high from your own fumes, and
4. Innovate to create higher-margin products and services.

Programs that Accelerate Success

CEO Mastermind group is for Milwaukee-area small business leaders and consultants who want to accelerate their growth in 2022. We meet monthly for lunch, and you get unlimited access to me. I’m limiting the group to 8. Six places are remaining.

FOCUSED is my 8-week mastery program for small business leaders and consultants to put the action plans in place to make 2022 their best year ever. The next program begins in late January; there are only eight spaces available. Click here for more information and to apply.

Innovation Mindset is a new 8-week program for consultants and small business leaders that I intend to launch in January, based on interest. This program gives you the tools to address (and help your clients address) the challenges facing small businesses in 2022 so that you can create an upward spiral that propels your business to new heights. Please reply to this email if you are interested.

The Trusted Adviser Program is my most intensive 1-on-1 program. Within 90 days, you’ll gain habits that create breakthrough success. You get personalized coaching and support, strict accountability, and commonsense action steps that get results. Get the details here.

Exclusive Events

The next Antietam & Gettysburg exclusive event takes place March 15-18. This program is for seven leaders and consultants who want to turbocharge 2022 with innovations. We use critical points on the battlefield to discuss decision-making, gaining buy-in, improving agency and initiative, and how to avoid getting high off the smell of your own gunpowder. We finish with an innovation workshop where you will develop action steps to gain decisive competitive advantages. There are four spaces left.

Books

LEADERSHIP: THE WARRIOR’S ART, second edition, is on the streets. We expect leaders to anticipate and shape the future so that your team can succeed. To do so, you need imagination grounded in a  practical perspective. That’s what you get with this book, which is why it’s been in print for over 20 years.

Zero-Sum Victory: What We’re Getting Wrong About War is my latest book about strategic decision-making. I use the disasters in Vietnam, Afghanistan, and Iraq to give you the tools and mental models to avoid the traps and own goals that have created quagmires for the United States. You’ll gain ways to improve agency, bridge silos, pivot smartly, avoid breathing your own exhaust, and many other outcomes.

Getting Unsolicited Advice? Think SMILE: The Five Fingers of Sanity and Success

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“Setting up a franchise is stupid,” Anna (not her real name) told me, “and forget about coaching. Coaches are a dime-a-dozen. You should enroll in our veterans’ program and figure out what you are able to do.”

Did you ever notice that unsolicited feedback is always about the sender and never about you?

Most feedback is about the sender. Look at your evaluations, and you’ll find that what your boss highlighted reflects their own priorities rather than an objective appraisal of you.

Unsolicited feedback is even more problematic because there is no accountability, and it’s often about control. The sender wants you to conform, be like them, and not rock the boat or challenge their beliefs.

Anna wanted to badger me into enrolling in a program that I did not need and discourage me from helping veterans build a meaningful, joyful, and profitable consulting business.

When someone gives you unsolicited advice, think SMILE: the five fingers of sanity and success.

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Your thumb, closest to your heart, represents the letter S: self-care. Exercise, diet, sleep, study, and well-being are vital to sustainable success.

Your pointer represents M: mentors, coaches, and advisors. They point out the shortest path to success and help you avoid getting high from your own fumes. I have two coaches, and their support has paid for itself many times over.

Your middle finger stands for I: Ignore the Annas.

Your ring finger: L is for loved ones. Dedicate time to those who matter most. No one’s ever had a deathbed with that they’d spent less time with their loved ones and more time at the office.

Your pinky signifies E: your employees, customers, partners, and allies. They are the people you serve.

SMILE, and you’ll keep things in perspective. Here’s the video that you can view and share.

Do you want people to give discretionary effort? If so, stop communicating in digital and go with analog

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Last week, I held an exclusive event at the Antietam and Gettysburg battlefields for an extraordinary group of small business CEOs and solo entrepreneurs. Our purpose there was to discuss innovation and ways to take our businesses to new heights. 

One of our most powerful discussions occurred at Little Round Top. On July 2, 1863, the 20th Maine Regiment, led by Colonel Joshua Chamberlain, defended the extreme flank of the Union position. The regiment held off repeated confederate assaults until they were nearly out of ammunition. As the next assault came, Chamberlain ordered his troops to fix bayonets and charge the attacking enemy.

His unexpected counterattack caught the confederates off guard. They broke and ran, thus ending the largest threat to the Union Army. The 20th Maine saved the day, and, perhaps, the Union.

Vital to the 20th Maine’s success was the addition of 117 soldiers on the eve of battle. These troops from the 2nd Maine Regiment were detainees, accused of desertion. They thought they had signed two-year enlistments instead of three and demanded to go home. Talk about disengaged employees!

The Union generals gave Chamberlain custody of the accused, with permission to shoot them if he wished. Chamberlain had about 300 soldiers in his command. Guarding a large company of deserters would deprive him of team members for the upcoming battle.

Chamberlain could have ordered them to stand in the ranks during the battle or face a firing squad. That’s the digital, on-off-on-off, approach: do what I say (on) or you’ll suffer the consequences (off). Based on what we know about employee engagement and the behavior of soldiers under fire, those forced to face confederate rifles, cannons, and bayonets would likely have broken and run away. The cascading effect would have doomed the Union Army.

Chamberlain used a different approach. He gained their trust, heard what they had to say, treated them respectfully, and talked about why he needed their support. He let them decide whether or not to fight. Persuasion is an analog approach, using a continuous signal to gain buy-in. Of the 120 deserters, 117 agreed to take up their rifles and fight, increasing Chamberlain’s capacity by over one-third. 

Too much communication today is digital. Leaders issue policies and demand compliance. You provide mandates with carrots and sticks. People yell at one another over social media. Your top lieutenants urge you to use stronger language and more drastic sticks. Skeptical employees dig in their heels or leave. Is it any wonder that there’s so much polarization in society and disengagement at work?

The analog approach to communication focuses on the ABCs: provide clarity, gain buy-in, and promote 360-degree accountability. Let people know what you need them to do and the desired results and outcomes (the Why). Let them figure out the how. Who’s helping you with the ABCs?

BREAKTHROUGH OPPORTUNITIES

The next FOCUSED program begins in September. This 8-week group program is for principled leaders who want to grow their businesses using the right focus, the right strategy, and the right team. 

The magic is in the implementation. We meet for 90 minutes each week. You do assignments that help you gain the right focus, strategy, and team. You eat the elephant one bite at a time using a 7-step process that helps you make the second half of 2021 your best six months, ever, and turbocharges 2022. 

Click here to see if the program is a good fit for you.

This program’s clarity and focus resulted in more high-payoff work that we love and less wasted time and energy. We expect 33% growth to reach $100k in monthly revenues and expand from there.
Matthew Hargrove and Barry Lingelbach, Black-Grey-Gold Consulting 

Chris’ Sustainable Growth Mindset, July 5, 2021

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If you do the same things over and over again, you shouldn’t expect the same results.

Wait … what?

You’ve heard the definition of insanity: doing the same thing over and over again and expecting different results. 

This twist is about innovation.

If you keep doing the same things, you aren’t going to get the same results. You are going to fail. Look at Sears, ToysRUs, Blockbuster, Blackberry, FAO Schwartz, and others.

They did the same things over and over again and expected continued success. They got complacent, failed to innovate, and are now either out of business or struggling. 

Conditions change, competitors adapt, markets shift, technology advances. You cannot control these externalities, but you can control how you encourage strategic thinking, gain external points of view, and promote innovation. 


BREAKTHROUGH OPPORTUNITIES

The next FOCUSED program begins the first week of August. This 8-week group program is for principled leaders who want to grow their businesses using the right focus, the right strategy, and the right team. 

Click here to see if the program is a good fit for you. Email me directly if interested.

This program’s clarity and focus resulted in more high-payoff work that we love and less wasted time and energy. We expect 33% growth to reach $100k in monthly revenues and expand from there.
Matthew Hargrove and Barry Lingelbach, Black-Grey-Gold Consulting