If it is so wrong to stare at a car crash, then why are they so fascinating? And in these tough times, watching another crooked leader taking the “perp-walk of shame” brings a grin to even the most cordial of us. Leave it to the ever-precise Germans to define this feeling as “schottenfreud” or “the taking of pleasure in the misfortunes of others.” The more pompous or self righteous the civil servant, business titan, or do-gooder is, the more the French got it right, saying revenge is a dessert best enjoyed cold.

If schottenfreud is fun from a distance, why is it so painful to watch someone you care about become so impervious to their impact? It’s because we care. In my work, I have seen the following examples of owners breathing their own exhaust.

• After failing to eliminate his salesforce by going direct to customers, the leader invites the reps to “come back home as all is forgiven” by his marrying the youngest sales rep.
• Returning from France and bragging at work how much money he spent on wine, an owner cuts payroll and publicly borrows money from an employee.
• After kiting a client’s postal check and firing his partner’s son, the tables are turned when he alerts the sheriff who impounds the owner’s boat just as he’s skipping town on it.
• After showing off his new Ferrari, an owner takes me to his board room where he has taped (not framed) Penthouse centerfolds to the mahogany walls.  

While the stories are horrifying, I can vouch for the good intentions and years of sacrifice that preceded each owner’s fall from grace. But at some point a chip switched in the owner’s head and the disconnection from reality snowballed down a slippery slope of complete self-delusion.

How can you tell if an owner’s ego and braggadoccicio have overwhelmed their confidence and conviction? What kinds of brakes and controls can you hope they embrace? It is high time when an owner

• Dismisses ideas as being irrelevant to their business when the ideas would create accountability
• Responds to questions regarding how their business is doing, by insisting there is no way to better it. Period.
• Believes that luck or being in the right place at the right time played no role in their success.  

Business ownership has so little accountability and oversight that without devil’s advocates and contrarian data to strike a balance, dysfunction is likely. When owners start believing their destiny is assured, it’s more likely that things are never as good or as bad as they think they are.

Here are some simple questions to ask and assure their feet are on the ground and they are not breathing their own exhaust.

1. What is their true price of being wrong?
2. What is their true benefit of being right?
3. Where does their comfort zone really end?
4. Where does their dogma really begin?

In such crazy times, there seems to be a fine line between stoicism and irrationality. Help the owners you know to stay on the right side and remember my favorite quote, “We become what we tolerate!”

No simpler words have ever hurt an owner more. Despite all your messaging, marketing, selling, and posturing, you learn it’s all for naught when:

• At a networking event, you overhear a colleague refer an ideal prospect to a competitor of yours. When you ask your colleague why he referred your competitor and not you, he says, “I didn’t know you did that.”
• Worse, even, you learn your customer just suggested his friend call an unqualified competitor instead of automatically pushing the work your way. And, when confronted, your client says, “You do that? I had no idea!”
• Your own employee hears and ignores your client drop multiple buying signals. As gently as you can, you point this out and your employee responds, “Oh that’s right, I guess we do that.”

This is painful for three reasons:

1. Your marketing and sales messaging is ineffective
2. You have no idea how much business you are losing every day
3. Your colleagues, customers and employees feel sheepish for not knowing better

But what can and should you do? Keep refining and simplifying your message. Look at it through the eyes of your colleagues, clients and staff. Have you really made it simple?

Who do you refer and why is it easy to refer those you can? Make it as easy for your supporters as you want them to do unto you. Are you able to refer your closest clients and colleagues to their prospects? Where you have done so, isn’t it because your clients and colleagues:

1. Communicate a clear, current and simple grasp of how their best and highest use is purchased and referred
2. Know how their message is understood and repeated by others
3. Track how and who is referring them and conversely who and how they are referring others

Hearing the damning words, “I didn’t know you do that,” is most painful when your own customers or clients are hiring others to do work you could be doing. Ask yourself, “Do you have a 100% share of your customer’s business?”

If not, then start uncovering and gaining these opportunities so your clients will see, first-hand, what you do!

In the last few weeks, three businesses I know well—all with good gross margins, well managed expenses and overhead, but growing accounts receivable and inventory costs—have had a shock to their systems. Their banks cut or closed their lines of credit. In “normal times,” or at least the past twenty years, a few phone calls to their banks’ competitors would have generated better alternatives from hungry bankers.

Credit and capital for most our business lives has been close to free and abundant. But alas! While rates are still low, cash is no longer abundant. With the current credit crunch, many perfectly acceptable credit-worthy companies are seeing their lifeblood of liquidity dry up. What can you do to stay liquid in a financial desert?

1. Don’t be a bank to your own bank.
   Reject any bank’s requirement that you must deposit money with them on order to borrow from them. If a bank can’t lend you money, don’t let their mismanagement of sub-prime mortgages become your problem. Don’t be there for them if they aren’t there for you.
2. Don’t be a bank to customers or anyone.
   Many companies, especially large ones, string vendors along as a matter of policy. If large companies were forced to pay smaller vendors on time, our economy would run much better. Do your part by just saying “no” to this kind of business. Remember that you don’t have a customer until their check clears your bank. Build in price-escalation clauses into your contracts for the materials and services you need to buy to meet your customer’s needs.
3. Barter for what you need to buy.
   It is remarkable how far a bit of creativity will take you! I had a client who provides professional services and swapped for office equipment. Once you are sure you need to buy something, shop around and ask. You will be amazed who else is in your situation and might traded with you.
4. Cut down on your credit addiction.
   It is said that in good times, the average American is two paychecks away from being homeless. How dependent is your business on credit? If you don’t like what you see, change it. Pay down those lines and learn to pay as you go instead of borrow what you can. Borrow only for inventory or services that you can convert and sell to someone else right away. Remember, the lower your credit line the more your business is worth.
5. Entice your customers to finance your growth.
   Give your customers generous discounts for prepaying their bills. Ask them to cover your costs of buying special inventory or equipment up front. Hold them accountable for promises they make. Take aggressive actions against those who won’t pay for commitments they make.

My friend and client Joe Pease, says during this environment, it is a great time to buy companies because:

• Valuations assume liquidity. If you can buy a company with cash, you will get a bargain.
• Poorly performing companies can be purchased for the price of their sales, as they cannot afford their overhead.
• Tuck-in acquisitions where smaller companies are being purchased by larger ones with more efficient infrastructures.

The old adage, “Cash is King” is as true as ever. Manage yours as if you were a banker. Actually, manage it better than that!

Last month I took a week off and went to Cancun. Unknowingly, I picked a resort favored by 20-24 year-olders down for Grad Week, a kind of post-college version of Spring Break. After watching them nearly get expelled from the resort on their first day, I gained their respect by winning the belly flop and dirty joke contests. Why? So this 50 year-old consultant could learn firsthand what makes 20-somethings tick.

Here is what I learned and some implications if you are employing and managing 20 Somethings (2OS’s)

Learning: 2OS’s make short term commitments called hookups which are made and broken quickly
Implication: Don’t expect commitment but hire for projects and structure them to achieve short term goals

Learning: 2OS’s draw great validation from the packs they create
Implication: Hire several people to do a job together or one job that can be shared by a pack

Learning: 2OS’s seek affirmation by their peers within their generation and are always taking pictures, dancing and dating in groups
Implication: Find ways of recognizing satisfactory performance through and by their peers

Learning: 2OS’s - This MTV generation parties and thinks in short bursts, multi-media and sound bytes
Implication: Structure their learning, work days and reward systems to favor bursts of frenetic productivity, not steady 8 hour days

Learning: 2OS’s look for direction from leaders and demonstrate conformity in their packs.
Implication: Pinpoint the leaders and create rewards for their constructive leadership and ability to get their packs to deliver.

Twenty-somethings lead a life and consciousness completely different than anyone older than them. Many live with their parents but probably will be the first generation not to live better than their parents. They have inherited a world of abundance both in lifestyle and problems they did not create and do not relate to.

Blind to what they see as old school and blissfully ignorant of time, longevity and investing for the future, they live in the present. And yes our future leaders will emerge from this group!