Lip Balm Will Not Save You

I once worked with a new business owner who started her own hair salon.  She had been in the industry for more than 20 years and felt ready to leap out on her own.  This sounds like a great story so far…frustrated technician is ready to begin running her own business and do what she loves.  Right?

Here were the problems:

•  She had signed a non-compete with her former employer, and she had to move more than 5 miles outside the radius of her previous location.
•  She couldn't, of course, gain access to her client list.  So, she couldn't call them to tell them where she was.
•  Before my client had even vacated her rental chair, her soon-to-be former employer was calling her clients and telling them their stylist had quit and had left no forwarding address.  All they had to do was come in, and someone else could start working with them.

It took weeks for even her most loyal former clients to find her in the new location.  Her expected revenue took a big hit, and she had little to no advertising budget.  She was a frustrated technician.  She had no experience in running a business.

When I met her, things were at the point of no return.  She was done, and out of business, only she didn't know it yet. In one conversation, we were discussing these troubles, and she said, “Maybe we should get one of those Burt’s Bees displays and start selling lip balm. Surely that will drive up sales.”  These were not the words of an expert business-builder or marketer.  These were the words of a demoralized, exhausted, scared technician who finally realized that she didn't know what she was doing.  How had she gotten here?  All she wanted to do was cut hair and make her clients feel beautiful.

When a business owner is in this position, it’s very easy to make mistakes.  Throwing a Hail-Mary works in movies, but seldom do you connect with your intended receiver in real-life.  My client’s problem was that she didn't know how to move retail.  She didn't have enough traffic, nor did she know how to increase it.  But, she also didn't have enough money to hire someone full-time to assist her, and she didn't have enough time to do it all herself. Her chair might have not been full, but she still had to be there every day to answer the phone. She had to make sure there was color and product for the clients she did have. She had to pay the utilities. She had to learn a new scheduling software. The laundry did not do itself. The landscaping and the sign needed to be maintained. And even though she wasn't making much money she now had to worry about sales tax, business returns, property tax returns and who needed a 1099.

This is the dreaded catch-22 some business owners find themselves in.  The sad thing is that she had no one to turn to before the trouble started, to mentor her and offer some advice on how to start things on the right foot.  She felt helpless now and like a failure.  She lost her building, she filed for bankruptcy, and then had to start over again.

How do you know if you’re in trouble?

•  Have you taken out a mortgage to help fund your business, over and above the mortgage you owe on your house?
•  Do you think that “one big insert event here” will help you turn things around?
•   Are all of your credit cards maxed out?  Have you considered debt consolidation so you can get another one?
•  Have you offered up junky self-prepared financials to someone interested in buying your business, only to hear them say no?

This is a true story for far too many people. Owning a business is high stakes game for the business owner. They have everything to gain, but they also have everything to lose. I still wonder how things might have gone differently for her if she had someone that could have helped her locate the landmines before something catastrophic happened. A person who would have helped bridge that gap between the theory of owning a business and the reality of running one. 

I really wish that in this case it had been as easy as selling lip balm.