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Right Way
How good businesses waste cash, talent and attention on ideas that were never commercially sound
Ask most owners why a business fails, and they will point to the obvious suspects.
Not enough sales.
A weak market.
Poor cash flow.
The wrong people.
Sometimes that is exactly what happened.
But I have also watched a business fail with record results on the board, talented people in the team and plenty of work coming through the door.
It still went under.
The problem was not effort.
It was where the effort, money and leadership attention were being directed.
I know because I was the one running it.
Record results were not enough
I joined a family-owned consultancy and was given freedom to shape my role. Over time, I became Managing Director.
We had twenty people, including twelve consultants. The team was capable. The core business was performing. We achieved record results.
There was one problem.
The owner continued investing cash in new ventures that had no proven commercial model and little evidence of traction.
The philosophy was effectively:
Build it and they will come.
The ideas were not obviously ridiculous.
That is important.
Obviously bad ideas are relatively easy to stop. The dangerous ones are plausible. They sound visionary. They have influential supporters. They may produce just enough encouraging evidence to keep everyone hoping.
So the spending continued.
I made money as quickly as I could. But the operating business could not generate cash fast enough to outrun what was being spent elsewhere.
Eventually, the administrators were called in.
I had to tell nineteen colleagues they were losing their jobs three days before payday. There was no final salary, no severance and no gentle landing.
I was one of them.
Four of us started again within a week. This time, we invested in ourselves and in work with a clear commercial model. We were profitable from day one.
The people had not changed.
The skills had not changed.
The market had not changed.
What changed was what we pointed ourselves at.
This is not about trimming a few unnecessary tasks
There is plenty of advice about stopping pointless meetings or removing low-value administration.
That matters, but this is a bigger issue.
This is about the major bets in your business:
- new products;
- acquisitions;
- digital platforms;
- new markets;
- internal transformation programmes;
- expansion plans;
- expensive systems;
- pet projects;
- ventures built around the owner’s conviction.
These consume more than cash.
They consume leadership attention, management capacity and some of your best people.
The wrong initiative can look productive for a long time because committed, talented people keep making progress.
That is what makes it dangerous.
Good people can make a weak idea appear viable long after the evidence says otherwise.
Effort is not evidence
Businesses often continue backing an initiative because:
- a lot has already been spent;
- senior people are personally attached to it;
- stopping would feel like admitting failure;
- progress has been made, even if commercial traction has not;
- nobody has agreed what failure would look like;
- the original assumptions have never been retested.
The initiative develops its own gravity.
More time is invested because so much time has already been invested.
More money follows the previous money.
People defend the work because they have put their reputation into it.
Before long, the question stops being:
Is this still the right investment?
It becomes:
How do we justify continuing?
That is not strategy.
It is sunk cost wearing strategy’s clothes.
The difference between a considered bet and a hunch
Investing ahead of the curve is not the problem.
Every growing business must place bets.
You will often need to spend before the return is certain. You may have to build capability before demand fully arrives. You may need to tolerate an early period where results are weak.
The question is whether you are making a considered bet or protecting a hunch you have fallen in love with.
Three questions expose the difference.
1. What is the commercial model?
How does this initiative make money, protect margin, reduce risk or strengthen the core business?
You should be able to describe the logic in a sentence.
Not:
It will position us for the future.
But:
This will enable us to serve this customer group at this price, with this margin, using this route to market.
The model may still be wrong, but at least it can be tested.
2. Where is the traction?
What evidence suggests the idea is working?
That might include:
- paying customers;
- qualified demand;
- repeat usage;
- improved conversion;
- reduced delivery cost;
- stronger margin;
- a measurable reduction in risk;
- progress against agreed milestones.
Activity is not traction.
A finished website is activity.
A successful pilot may be traction.
A large amount of code is activity.
Customers paying and returning may be traction.
Do not confuse work completed with a commercial case strengthened.
3. What would tell us to stop?
A serious investment has limits and decision points.
A hunch has neither.
Before committing further, agree:
- how much you are willing to invest;
- what evidence should exist by each stage;
- which assumptions must hold;
- when the next decision will be made;
- what would cause you to pause, change direction or stop.
Without those conditions, the initiative can absorb money indefinitely because every setback is interpreted as a reason to invest more.
The owner is not exempt
This is where the conversation becomes difficult.
In many SMEs, the owner has enough authority to keep an initiative alive even when others have lost confidence in it.
People around them may see the problem but stay quiet.
They do not want to challenge the vision.
They do not want to appear negative.
They may believe the decision has already been made.
The initiative survives because nobody feels able to ask the question that matters:
If this were not already ours, would we choose to invest in it today?
That question strips away history, ego and sunk cost.
It forces the business to look at the opportunity as it stands now.
Audit your major bets
Write down every initiative currently consuming meaningful cash, leadership attention or specialist resource.
For each one, answer:
- What outcome are we buying?
- How will it make or protect money?
- What assumptions must be true?
- What evidence supports those assumptions?
- What have we invested so far?
- What is the next proof point?
- When will we review it?
- What would cause us to stop?
Any blank is a warning.
Any answer based mainly on belief is a warning.
Any initiative with no stopping rule is a warning.
The point is not to kill innovation.
It is to give innovation the discipline it needs to survive.
The right things deserve proper backing
A good business should take risks.
It should test new ideas.
It should invest for the future.
But it should know the difference between courage and denial.
A considered bet has:
- a clear purpose;
- a commercial model;
- evidence;
- limits;
- milestones;
- a stopping rule.
A hunch has confidence.
Confidence is not enough.
The business I ran did not fail because people were lazy or incapable.
It failed because too much money and attention were directed towards initiatives that never earned the right to continue.
The wrong things, done brilliantly, will still sink you.
Sometimes they will sink you faster because they are being done so well.
Find Out Where Friction Is Holding Your Business Back
Poor investment discipline rarely exists in isolation.
It is often connected to unclear priorities, weak challenge, owner dependency, poor measures and an inability to stop work that no longer deserves support.
The Friction Diagnostic will help you step back and consider where friction may be affecting your people, processes and commercial performance.
You will receive a structured view of the areas that may warrant closer attention and a clearer starting point for deciding what to investigate first.
Find the friction. Focus the team. Fix what matters.
