I’m a complete junky for all things business and entrepreneurship related. I’m also a junky for streaming video content and was happy to learn that CNBC’s “The Profit” is now on Hulu. If you’ve never seen the show, the basic premise is that entrepreneur and investor Marcus Lemonis fixes failing businesses. This doesn’t always happen of course. In some shows, Marcus will make a deal with the business owners, but they’ll still flounder and fail in the long run. Other times, he walks away without ever making a deal because he considers the business and owners such a hot mess that he needs to get out of there immediately. In the happier episodes, Marcus becomes a partner, fixes the business, and everyone gets rich.
Marcus goes into every business with three core business principles in mind: People, Product, and Process. He gives pretty much the same speech about half way through each episode that these are the three metrics he’s going to use to evaluate and ultimate improve whatever business is being profiled on the show. I love that philosophy and I think we can all use that as a starting place when considering our own business ventures. What struck me though is that there are three principles of failure that you see on the show repeatedly.
1. Ignorance
This one shouldn’t be surprising to anyone. Many business owners have no idea what they are doing. As Marcus asks people questions, it becomes clearly abundant whether they know what’s up or if they don’t. He asks to see financial statements and people will give him blank looks. He’ll ask how much money does the business net after expenses and more deer-in-the-headlight expressions will appear. When it comes to operations, business owners don’t often understand their own processes or the amount of inventory that they have. These are all things that are fundamental to running a successful business.
A lot of people automatically assume this is an issue of formal education. As someone who got an MBA, I strongly disagree with that argument. My great-grandparents came from Italy with little formal education, but managed to successfully establish a deli and a florist. There are many successful business owners in your community who are doing similar things. The resources are out there and it’s more a matter of discipline to find out what you don’t know. The advantage that you and I have over my great-grandparents is that we have the internet at our fingertips and all the answers are out there. With that said, I struggle with the discipline involved in maintaining good record-keeping in my own part-time Amazon business, so I empathize with people who often end up looking foolish on “The Profit”.
2. Fear
This one is hard to overcome because it’s built into our human psyche at a very fundamental level. We fear the unknown. We fear messing up. We fear change. These are all things that I’ve seen Marcus deal with on “The Profit”. People know they have a business that isn’t working, but they fear changing anything because the status quo is comforting. The only way to beat this is a mindset shift. For some people, going to the gym, meditating, journaling, or some other spiritual like activity can help them get past their fears. For others, they might be very confident people, but their confidence is shaken because they didn’t take the time to educate themselves on the issues at hand. Ignorance and fear are very much related.
3. Ego
The episodes of the show where over-inflated egos are present are the most difficult and awkward to watch. “WHAT DO YOU MEAN YOU WANT 50% OF MY CRAPPY FAILING BUSINESS TO BAIL ME OUT?!? WHO DO YOU THINK YOU ARE WITH ALL THAT WORKING CAPITAL AND SUCCESS IN BUSINESS?!?” This is literally how it often plays out. A guy could tell Marcus that he’s less than a month from folding, but he doesn’t want to give up half the business for a second lease on life. As a viewer, it makes absolutely no sense to me.
When you think about it though, haven’t we all had these emotional and irrational responses to things at times? I know I have. Usually hindsight proves embarrassing when you reflect on how your own foolish hubris has made your situation worse than it needed to be. The secret is to stay calm, cool, and collected. While cliché’, it’s absolutely true that things in business “aren’t personal”. Sometimes fear and ignorance play a role in this issue too. People fear giving up control, because they’re ignorant of how little control they really have. If your business is a month from failure, how much control could you possibly have? That’s right… zilch, nada, none.
Conclusion
I look at these three issues as the cardinal sins of business. If you haven’t watched “The Profit” before, check it out sometime and keep an eye out for these three issues. Watch how some people overcome them and others do not. Failure to overcome obstacles is most often a choice and in business it’s a very unprofitable one.
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