2 Reasons Why Big Businesses Fail In A Down Economy And What You Can Learn From Them…

You’ve probably heard on the news that major companies are failing left and right in this recession economy (no, I am not making excuses for them).

Circuit City, major automakers, big financial companies, etc….etc…

I believe there are 2 primary reasons they are failing:

1)  They hire minimum wage workers for their critical customer engagement points like sales and support in efforts to please their shareholders (showing their freaking greed and lack of concern for their customer experience).

Circuit City is a prime example of this…but many companies just “put a warm body” out there for their customers, and give that employee some weak sales and product training, then expect that will be “good enough” for their customers…so long as the losses from complaints and refunds doesn’t exceed the profit savings gained by not paying for seasoned help.

Guess what big companies…this model doesn’t implement leverage properly…and while you might be making a profit…you’re not making the profits you could be if you leveraged good salespeople or support personnel instead of unskilled labor with weak training.

Grandpappie used to say “You get what you pay for.” That couldn’t be more true when it comes to leveraging your sales and support staff to big profits.

But as many things work in our business world, the “guys at the top” of these companies are more concerned with short-term profits than the leverage and big-time sales they could be generating…so nothing will change most likely.

2)  They play the blame game on conditions that really have nothing to do with why they are really failing.  One example is displayed on news media “______________ (insert random big company CEO here) blames this downturn in sales on the current recession/economy”.

When they play this blame game…they are basically saying “We’re too fucking lazy to pay real attention to the real reason we’re failing, so we’re going to put our heads in the sand and ride this situation out and hope we can return to our ‘minimum expense, cheap profits’ methodology at some point.”

All I have to say to this is “Wow.”

So what can you learn from this?

Never forget your roots, and design your business systems around the main growth staple for businesses everywhere, people.

As I have said 100 times or more…business is about people, people. 🙂

Joseph Ratliff - How are you treating your customers?
Joseph Ratliff - How are you treating your customers?

P.S. As a follow up to this post, Perry Marshall has also blogged about this and has a MP3 file you can download of one of his mentoring sessions.