Lessons My Business Clients Have Learned – The Hard Way

When we visit with our clients, we ask about things they have learned in their businesses, especially lessons learned during hard times such as in 2020. The hard times give business owners valuable insights that stick with them over their business lives and often can help others prepare so they can avoid such issues.

Here are a few of the lessons they have shared with me:

Product Pricing

Whatever you are selling, you don’t want that sale to be at the lowest price possible. That gives your business no leeway to recover in tough times and may even price the sale below the cost so that you lose money for each sale. When demand falls off in a recession, be especially careful of how you price – you could end up in a downward pricing funnel.

Similarly, if you are going to be the highest price out there, you better have something that the customer cannot live without. Combine your offer with something that they cannot get elsewhere, or make sure your product is so superior to the competition that they will buy it, even with the high price.

Hire Slow – Fire Fast

There is an art and a science to hiring well. Unfortunately, as experienced a business owner that you are, you do not always hire the right person. The team suffers with the wrong person in place, although as a business owner, you generally try to make it work as you aren’t seeing the day-to-day ramifications. Finally, something happens, where you must let that person go. The team tells you (or thinks to themselves) why it took you so long to see the problem. This can erode morale and trust.

Build Items Into Your Business That Make It Worth More

One of the saddest things I have seen again and again with businesses is that when their owners are ready to exit their business, they always think that the business is worth more than it is. The business owner does not even know what will make their business more valuable to a potential buyer. For one of my clients, what made the business worth more was to add customer long term contracts into the business. These tended to ensure that the customers would stay with the business for a longer period. How do you find out what works for your business – ask the valuation expert what would do the trick.

Know Your Numbers

Many companies tell me that they have made mistakes in their business by not knowing their numbers well enough. Not being on top of the margins can have the company selling product at a loss. Having that loss (but having an increase in the top line) may lead a business owner to increase their capacity to manufacture more – at a loss.

Buying a Business and Spending Too Much Money

Over the last several years, there have been a lot of businesses changing hands. A business seller may have a broker who puts the business on the market for a particular price. The potential business buyer will many times acquiesce to the price, while negotiating the other terms. Instead, they should use a business valuation expert to give them what the price should be, so they don’t have buyer’s remorse later.

Don’t Put Your Children in Charge Until They Have Earned It

Many times, the owners of family-owned businesses put their children in charge of various departments of the business, leading to bad feelings between the team members. Most of my business clients who have done this before wish that they had started the children in the “mail room” and made them work for other team members. Working toward a promotion would allow them to have earned that higher level job.

Develop Your Vision and Review it Frequently With the Team

Many business clients tell me that they worked so hard to make their business a reality that it is hard to sell the direction of the company to the team. They wished that every three to five years they had written down the vision of the company and allowed the team input into it. Reviewing it in their team meetings establishes the culture for the company.

Don’t Forget to Keep Training your Team’s Leaders

When business owners hire team leaders, they often look at the skill set that the team leaders are coming equipped with. That’s fine, but in the next month or year after they are hired, that knowledge or skill set may become obsolete. It is essential to find ways to continuously have your team leaders learn, grow, and lead the pack.

These are but a few of the lessons that clients have told me that they have learned in their businesses – the hard way. Feel free to share those lessons that you have learned and help others avoid issues you had.

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Denice Gierach

Gierach Law Firm

Denice Gierach is an attorney, CPA, Northwestern University business master's graduate, and has owned several businesses from real estate to manufacturing. She is the lead attorney at Gierach Law Firm in the Chicago area. With more than 30 years of experience, she has been a respected and sought-after resource for businesses looking to grow, sell, solve problems, and succeed long term. Her insights across business areas gives a fuller lens to business issues and solutions, and helps businesses grow and succeed with less time spent on legal issues and other time-consuming problems.

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