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How small businesses can avoid flatlining

Entrepreneur and founder Annie Liao Jones points out that flatlining is a temporary state no matter the circumstances. Here are some strategies to recognize and deal with it before it kills your startup.

How small businesses can avoid flatlining
[Source illustration: JungleOutThere/iStock]

Every business owner who’s still in the game knows what it’s like when it’s just you and your computer and your entity that’s a sole proprietorship. It’s a lonely place to be. You have every naysayer wondering why you didn’t get a job with health benefits, a cushy 401(k), and a shot at that corner office.

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Depending on your motivator, you either have a lot to gain or you have everything to lose. You left the cushy job and nothing about your entrepreneurial drive will make common sense to most. Everyone around you was less inclined to support your ambitions, when the truth is that 22.5% of small businesses fail within the first year.

Right then, at the beginning of this entrepreneurial escapade, things seem like they couldn’t be more precarious. In fact, if all goes well, the stakes become much much higher.

Now, let’s jump ahead. You did it. Naysayers have gone by the wayside and you said “Later!” to them a long time ago. You’ve got actual years under your belt, and you look back upon that time with gratitude. They say that once you’ve made it, the beginning was the most fun. And it’s true, but I argue it’s because you didn’t realize what was about to happen when you grow: You’re responsible for employees being able to feed their families. Heck, you’re responsible for them being able to afford groceries.

You don’t go from your home office to your real office without growth–where the line indicating your revenue is constantly going up. The line going up is fantastic. It’s satisfying knowing your big bet is paying off. You feel it, and that feeling is transferred through the whole company. The opposite of that is the falling line where profits are shrinking, and the company is at risk. That produces an entirely different feeling that is nonetheless energizing. You have to fight to survive.

Then there’s the in-between, a line that is completely horizontal. A flatline doesn’t elicit the same excitement or dread. The bills are being paid, the employees are being paid, you’re being taken care of too. You don’t have to worry about staffing up or laying people off. It can be comfortable and can lead to complacency. That’s the mental and financial space I fear the most.

That sort of stability might seem like a dream now that we’re months into a global pandemic and quarantines (as of this writing). In truth, flatlining is a temporary state no matter the circumstances. Unprecedented natural disasters aside, industries are constantly being disrupted and it’s the complacent companies that fail to predict or adapt to those changes.

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I have the rare privilege of working for and interacting with other business owners, entrepreneurs, founders, and CEOs. It’s normalcy I take for granted, and it’s maybe why our clients like to meet with us monthly. They get face time with another business owner. Most entrepreneurs will tell you that owning a business is the loneliest endeavor, and it’s true, even having the vantage point I do. Without it, I imagine it would feel like trying to get to the finish line with blinders on. In my 11 years as a business owner working for other business owners, chief operating officers, and serial entrepreneurs, I can say the flatline is something I can sense, fear, dread, and see coming from a mile away. How?

From my vantage point at my branding agency, when everything is running smoothly, every deliverable is approved, the client is ostensibly happy and you rarely hear from them. That’s the dream, right? That’s how you’re supposed to be scalable, correct? Wrong. So very wrong. The client who approves every single deliverable without hesitation is probably just not interested. They are checked out. They’re probably on the flatline. That means they’re about to be on the decline, which in turn means we won’t be working together much longer.

You know how in horror movies they’ll put suspenseful music in an otherwise innocuous scene to clue the audience into an impending danger? The flatline is like that, but you have to have gone through it yourself to be able to hear the music. Because here’s the thing: No one ever stays on the flatline. Businesses will either stagnate and go down or innovate and go up. From my perspective as a business owner, I can sense trouble because I’ve been through the horror show enough times to recognize the cyclical nature of it. During the flatline period, it may seem to my employees that I create problems that don’t exist. Why? They just don’t exist yet.

When you’ve been on the flatline, you will do anything and everything to avoid it. If you’re still in that earlier phase of the business lifecycle I mentioned at the beginning, here’s how to tell you’re flatlining.

1. Not measuring your own time

Your own time is ironically the one most business owners don’t measure. They are mainly dedicated to zeroing in on operations because you have to run efficiently to scale. Yet, when you are putting in the same 12-hour days as you were years ago and there isn’t a profit to show for it, you know it can’t stay that way. What is going to get you off the flatline and onto that line going up?

2. Not making smart revenue allocations

No seasoned CEO wants to be brought into a company to “land a plane” in the foggiest of weather. Yet, they are brought in exactly for being on the flatline. When the board has no idea why there are six marketing directors and the revenue they generate barely pays for half of them, this is because they know they are about to get off the flatline.

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3. Indecision

In my experience, this is the biggest indicator a client is on the flatline. When we see this happen, we will put all our resources into different profit strategies to force a decision. If there isn’t a sense of urgency, we (and I mean my company) have to decide if the client is worth fighting for. We never stagnate. We will always put up the good fight, but when indecision becomes a norm I know as an entrepreneur it’s not a trait I want my team to ever get used to.

When we see clients struggling to either adopt a certain technology that may keep them ahead of their game or not, we are not scared, but we are comforted. They are the ones studying the startups that are making a difference in their respective industries and getting in the nitty-gritty of how they were able to accomplish something in such a short amount of time.

If anyone is going through it, please know it’s a good thing. Your company is going through growing pains. Yes, you have decisions to make, but isn’t that what freedom is about? Having choices? Entrepreneurs who have been on the flatline need to be looking for something to make a decision on. It’s because they are wondering where to allocate their resources, be it time or money.

All of this comforts us because we have met another client who knows the flatline all too well and has adopted a growth agency to keep them off the flatline. Our job as the business builders, the growth hackers, and the performance-driven execution team, is to explore that nugget of data no one saw coming. And to be excited to see it. Without that nugget, you are not testing for the right data. Without that nugget, you don’t really know how you stack up to your competitors or whether you’re being innovative enough or not. Without testing to find that damn nugget, we know we are looking at stagnation, and then the line going down.

The trick is to never settle. Never get too comfy. There will always be competition out there that is a little more brazen, and they’re the ones who will succeed.


Annie Liao Jones is the founder and CEO of Rock Candy Media, an advertising agency in Austin.

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