THE BUSINESS WE MEANT TO BUILD

How good businesses lose their way

Chapter 23 – The Business We Meant to Build

At the beginning of this book I introduced the Logical Bystander, that slightly inconvenient figure standing off to one side of the room while everybody else becomes increasingly excited. He is not without emotion, ambition or imagination, but he has the irritating habit of asking whether the pieces of the argument actually fit together. There is something almost Spock-like about him, except that business is rarely logical enough to survive completely without instinct, hope, courage and the occasional leap into the unknown.

I thought it appropriate that he return before we finish. We have allowed him to wander through pricing, growth, compliance, numbers, advisers, competition, courage, purpose, succession, sunk costs and businesses that somehow became something their owners never consciously intended to create. Having listened to all of that, he might reasonably raise an eyebrow and ask the simplest question in the book: what were you trying to build in the first place?

It sounds almost too simple, which may be why it is so easily lost. Few people begin a business because they have an overwhelming desire to prepare BAS returns, negotiate bank facilities, study debtor days, wrestle with payroll systems or spend Sunday afternoon wondering why the software has stopped talking to the bank feed. Those things arrive later, along with staff, tax, compliance, leases, equipment, customers, competitors and the hundred other responsibilities that attach themselves to the original idea.

The beginning is usually much more personal. Somebody wants independence, money, freedom, security, challenge, creative control, something to hand to the children, a better life for the family, escape from an employer or simply the opportunity to prove that they can do something better than the way they have watched somebody else do it. There is often a romantic quality to that beginning because the dream is visible while most of the price remains hidden.

Then business happens.

Not suddenly, and certainly not maliciously, but one decision at a time. A larger premises seems sensible, another employee becomes necessary, a new product looks promising, a competitor forces a reaction, the bank makes something possible, an accountant suggests a structure, a consultant recommends a system and somebody at a conference explains that every serious business should be scaling. Individually, each decision may be perfectly defensible while collectively they can carry the owner somewhere they never consciously chose to go.

That is one of the peculiarities of business that has fascinated me throughout my working life. We spend enormous amounts of time discussing how to build a business and comparatively little time asking why this particular person wanted to build this particular business. The shelves are full of systems, methodologies, habits, funnels, structures, growth strategies and supposedly essential steps, yet the answer to why the owner began can disappear beneath the weight of everybody else’s instructions about how they should continue.

There is nothing inherently wrong with advice, and that distinction matters. I have spent more than forty years giving it, so it would be somewhat hypocritical to reach the final article and announce that advisers are the problem. Good advice can shorten expensive learning curves, expose risks, identify opportunities and stop an owner from discovering twenty days too late that a choice which existed last month no longer exists today.

The problem begins when advice quietly takes ownership of the destination. The accountant may want a tidier business, the banker a safer borrower, the consultant a more scalable operation, the marketing adviser more leads and the business coach a larger target. All of those outcomes may be useful, but none automatically answers whether they move the owner towards the life they originally hoped the business would create.

The Logical Bystander would probably struggle with some of the conversations we have normalised around growth. If a business turns over $2 million, somebody will eventually ask how we get it to $5 million, and when it reaches $5 million somebody will start talking about $10 million. Rarely does anyone interrupt the excitement long enough to ask whether the owner wanted a $10 million business, or what happens to their life if they actually get one.

That is not an argument for staying small. It is not even an argument against growth, because stagnation dressed as contentment can be every bit as dangerous as growth pursued without purpose. CANEI, Constant and Never-Ending Improvement, still matters whether the business wants to become ten times larger or remain roughly the same size for the next decade.

Improvement and enlargement are not synonyms. A business can become better without becoming bigger, just as it can become considerably bigger without becoming any better at all. Better margins, stronger systems, improved customer relationships, greater staff capability, less reliance upon the owner and more predictable cash flow may represent extraordinary progress even if the sales graph does not provide something exciting to put on a conference slide.

Perhaps that distinction brings us closer to the real issue. The owner who originally wanted freedom may eventually build a business that cannot operate for forty-eight hours without them. The person seeking financial security may create enormous turnover while carrying debt, weak margins and constant cash-flow anxiety, while the person who wanted more time with the family may discover that growth has produced a very successful organisation run largely from a mobile telephone during dinner.

None of that necessarily means the journey went wrong. Dreams change, circumstances change and people change, and it would be absurd to insist that something imagined at thirty must still govern a person at sixty. The question is not whether the original dream has remained untouched but whether the changes were consciously chosen or merely accumulated.

That is where the Logical Bystander earns his place in the room. He is less interested in whether the latest decision can be justified than whether all the decisions still point roughly in the same direction. He may even ask whether the business owner is driving the business or whether the business, through years of reactions and obligations, has quietly taken the wheel.

Numbers can help answer part of that question, although they cannot answer all of it. What the Accountant Saw grew from years of observing that numbers rarely exist in isolation because they are usually the footprints left behind by earlier decisions. Profit, debt, wages, margins, cash flow and taxation tell us much about what the business has been doing, but they cannot tell us whether the owner is happy with what that activity has created.

That part requires a different conversation. It requires somebody to ask what the money is for, what the growth is for, what the additional staff are for and what the owner expects to be different when the next target is achieved. Without those questions, business can become extraordinarily efficient at taking somebody to a destination they never wanted.

This is where my old Banks Consultancy idea of acting like a “silent” partner has always mattered to me. The quotation marks around “silent” were important because silence was never really part of the arrangement, and a useful adviser occasionally needs to ask the question everybody else has politely avoided. The role, however, was never to substitute my ambition for that of the client.

Sometimes that meant challenging an owner who wanted to grow faster than the numbers could support. At other times it meant challenging somebody who had become comfortable enough to stop improving, because “enough” may describe the size of a business but it cannot sensibly become the entire strategy for running one. Advice only becomes useful when it understands what the owner is trying to achieve before explaining how a particular decision might help or hinder them.

The same applies to compliance, although that may seem an unusual place to find philosophy. My old promise to drag clients kicking and screaming to compliance was deliberately colourful because very few entrepreneurs wake in the morning thrilled by the prospect of reconciliations, lodgements and keeping government agencies satisfied. Yet the older I became, the more I saw compliance not merely as an obligation but as part of building a business strong enough to remain available for the dream.

The Discipline of Boring sits beside it. Invoices sent properly, debts collected, margins checked, records maintained, promises kept and problems addressed while they are still small are unlikely to feature in anyone’s romantic recollection of why they went into business. They are nevertheless among the things that prevent the dream from being strangled by avoidable disorder.

That may be one of the messages running beneath this entire collection. The romantic business and the logical business are not enemies, despite the way they are sometimes presented. The dream provides a reason to endure the boring parts, while the boring parts give the dream a reasonable chance of surviving contact with reality.

The Little Blue School Book has always circled a similar question from another direction. Whose definition of success are we pursuing, and how much of what we now call ambition has actually been borrowed from somebody else? Business adds another layer because there are so many people prepared to provide a definition on our behalf.

We are told what successful businesses look like, how fast they grow, which technology they use, what their founders should earn, how many followers they should attract and what exit multiple ought to make the years worthwhile. Algorithms reinforce what attracts attention, gurus repeat what can be packaged and competitors provide a convenient measuring stick even when they may be heading somewhere completely different. The noise becomes so constant that silence can begin to feel like falling behind.

Yet occasionally silence may be exactly what is required. Not permanent retreat, not avoidance of markets or economics or changing technology, but enough quiet to hear the question beneath all of it. If nobody else could see the business for a moment, would you still want to build it this way?

There is no universal answer to that question. One person may genuinely want an empire, another may want twenty excellent employees and a business that lasts generations, while somebody else may want three staff, no debt, enough money, Fridays off and a boat waiting in the shed. None of those ambitions becomes superior simply because somebody can produce a seminar explaining why theirs scales better.

The danger lies not in choosing differently but in forgetting that there was a choice. Hundreds of sensible reactions can eventually become a strategy by accident, and obligations have a remarkable ability to present themselves as inevitabilities once they have been allowed to accumulate. Eventually the owner may stop asking what the business should be and concentrate entirely upon feeding what it has become.

Perhaps this is where 20 Days Too Late also finds its quieter connection to the subject. Timing is usually discussed in terms of tax, structures, transactions and opportunities that disappear after an event, but lives and businesses contain their own disappearing choices. There can come a point where debt, staff, leases, family expectations, customer commitments and personal financial needs make changing direction much harder than it once was.

That does not mean change becomes impossible. It means recognising drift earlier is generally less expensive than correcting it later, which is true of almost everything from taxation to steering a boat. A small adjustment made while the destination remains distant may matter far more than a heroic turn attempted when the rocks are already close.

After all the subjects we have wandered through in these pages, I keep returning to the same thought. Business is ultimately a vehicle, albeit one with an extraordinary ability to convince its owner that the vehicle itself is the destination. Turnover, profit, valuation, systems, premises, employees and market share matter greatly, but their meaning depends upon what the person behind them hoped those things would make possible.

The Logical Bystander does not need to tell us what that should be. He does not need to recommend selling, growing, downsizing, borrowing, investing, retiring or beginning again, because the moment he does that he stops being a bystander and starts trying to own somebody else’s journey. His usefulness lies in standing quietly beside the owner and asking whether the logic of today’s decisions remains connected to the purpose that once made those decisions worth taking.

Perhaps the best place to finish, then, is not with an instruction but with a return to the beginning. Ignore the guru, competitor, accountant, banker, algorithm and economic commentator for just long enough to remember what you once hoped your business would give you, and then look carefully at what it asks from you today. The final question belongs entirely to you: is the business you are building today still taking you towards the life and business you meant to create?