What Greek Philosopher Plato Can Teach Entrepreneurs About Making HARD Business Decisions
Greek Philosopher Plato once said, “A good decision is based on knowledge and not on numbers.”
You may have to read that a couple of times. Even then, it still probably reads like an oxymoron.
Because all sound business decisions are based on complex financial analyses and projections, right?
And also. . .no.
I say that because, as a Business Coach, year after year I work with Owners whose data say everything about the state of the company — but nothing about what they should do.
That’s where “Plato’s Knowledge” comes in handy.
Let me tell you a story to illustrate.
Two Business Owners approached me a couple of years ago. Together, they’d grown their tiny services business into a 20-employee company in 3 states that grossed nearly $3 million per year.
However, after the unexpected departure of their #1 client, revenues dipped below $2 million per year.
By the time we met, these Co-Owners found themselves $2 million in debt and out of credit with their suppliers, with personal credit cards maxed out, too.
Because they had refused to have difficult conversations about lifestyle changes and company downsizing, their out-of-control beast of a company now controlled their destinies.
“I don’t see a light at the end of our tunnel,” one of the Co-Owners told me. “We’re ready to close the doors. File for bankruptcy. Personal and business.”
“You realize what that means,” I shot back immediately. “Your employees are going to be left jobless and broke, possibly even homeless.” Nearly half of their staff lived in depressed areas, so I knew what spontaneous unemployment meant for their families.
Their responses amounted to little more than excuses.
Unsatisfied, I asked to review the past several years’ worth of tax information, P&L statements, and expense reports.
Sure enough, the data offered up a single narrative for the future of the company in line with the Co-Owners’ expectations: Shut. It. DOWN.
But I had knowledge that couldn’t be gained from spreadsheets — the good Business Coaches always do.
And so, I shared with the Co-Owners the knowledge that hadn’t revealed itself through the data.
“The problem you’re facing is not the loss of your biggest client,” I said. “The problem. . .is, you.”
I let that statement sit for a minute, just enough time for awkwardness to give way to admission.
“Yeah. . .” They both sheepishly nodded. “You’re right.”
“That means the twenty people who are not guilty of wasting resources and backing away from responsibility must not suffer if we can help it.” One owner said, while the other nodded his head in agreement.
I said “I know how important your employees are to you, and I have a plan that will allow your business, and most of the jobs, but not yours, to be salvaged.”
Their ears perked up like a lap dog’s at the mention of bacon treats.
My plan, explained on the spot but expounded over the weeks that followed, involved both Co-Owners keeping their homes and most of their assets. I would engineer the sale of the company to a key employee, who knew how things worked around there better than both of the Owners.
Both men wholeheartedly agreed.
Now, the company is back over $2 million in annual revenue with less than $300,000 in debt, all of which is in a revolving line of credit.
The business is in good standing with the bank, all suppliers are current, and many of the original employees never missed a paycheck.
Within 24 months of the sale of the business, I’ve helped the new owner reach substantial profitability by stripping away unnecessary expenses, and we are now seeking to acquire a struggling business in the same field to grow to the next level.
Yet none of this would have come to pass if my eyes remained on the data alone.
By observing the Co-Owners’ behavior, I gained the knowledge needed to advise the company in a new direction while salvaging jobs, relationships, and fortunes.
Are you ready to become the next success story?