It's Not the Economy, Stupid Take charge of your business with these 5 uncompromising tips.

Your sales are down. Your operating costs are out of control. Your cash flow has slowed to a trickle. Your bank won't give you a loan. Of course you blame the economy. Everyone's suffering, so it's no wonder your business is in trouble. Right?


Don't blame the economy. Recession or no recession, if your small business is failing, it's your fault.

Sure, we all take hits in downturns. But if you're struggling, it's because you've been doing something wrong all along. Take a good hard look under the hood and you'll see that most of the problems in your small business are internal. But guess what? That's good news. That means the situation is not beyond your control and can be fixed.

It won't be easy. My advice is controversial and uncompromising, but there is nothing I preach that I don't practice myself as a business owner. Here are five things:

  1. Forget teamwork . Teamwork is overrated. It simply doesn't work in most small businesses. Insisting on teamwork is a fast route to lousy financial performance. Why? Because your team is only as strong as its weakest link. A single poor performer brings everybody down.

    Employees crave strong leadership and structure, so focus on individual performance. Place set goals and demands on each head, one by one. Your employees have to know that at the end of the day, they answer to you, not to each other. And replace that tired clich� "There is no 'I' in team" with this thought: There is no $ in team--just mediocrity and excuses.
  2. Micromanage like crazy . Don't delegate to the point of abdication. Delegating is just another word for shirking responsibility. Expect someone else to do it and 90 percent of the time it won't get done. In a small business, you don't have the time or money to correct someone else's mistakes.

    Instead, you should wear the badge of "control freak" with pride. Sure, delegate tasks, but watch your employees like a hawk until you are satisfied they are doing what they are supposed to do; then keep watching. Insist on "flash reports"--one-sheeters that give you daily updates on the status of each flashpoint in your business. And never hand over the reins of your business to anyone, no matter how senior the employee.

    Micromanage, micromanage some more, then circle back to make sure the task is getting done, and done right. You may have to put in a lot more time at the office, but you'll ensure your business is making maximum profits.
  3. Pay raises are over . Freeze your salaries now. Paying for performance is an absolute necessity for small and midsized businesses to achieve real profitability. Anywhere from 30 percent to 100 percent of an employee's compensation should be based on performance, and that amount should be against the goals set for employees by the owner.

    This applies especially to businesses with sales staff: sales people should have 100 percent of their compensation based on performance. Keep in mind that pay-for-performance doesn't just mean an employee gets paid more for doing well--this is not an entitlement. You have to be willing to set up a system and then also penalizes failure to perform.

    Pay-for-performance is so important to the success of your business that if you don't establish it today, you should fire yourself.
  4. Fear is the best motivator . Owning a small business isn't a popularity contest. You cannot be effective unless you are feared and respected by your employees. Your employees won't thank you for being tough on them, but they'll respect the dictator who keeps the business afloat and continues to cut them a paycheck. And fear of not getting a paycheck was, is and always will be the best motivator.

    Fear shouldn't just motivate your employees. It should motivate you. Never get too comfy. A business owner's internal fear of failure is what keeps the company alive.
  5. If your business fails during a recession, it's your fault . This bears repeating. It's not the economy, stupid, it's you. Don't use the recession as an excuse. If you're not surviving it's because you weren't doing all that you should have during better times.

    Resist the bunker mentality--if you wait until the tide turns, you will drown. Instead, take action: cut costs, get aggressive about sales and fire mediocre workers. Continue to invest in areas of your business that will generate growth.

    Don't play the victim. Do everything you can to take care of your business--work harder, faster and smarter than the competition by a factor of 10. As long as your business has a pulse, it's in your power to turn things around.

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