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Leadership Training - February Leadership Situation

THE LEADERSHIP TRAINING/MENTORING CORNER

In the August 2025 Newsletter we started a series called “The Leadership/Mentoring Corner” in which we posed a thought-provoking situation for you to think about and put yourself into asking yourself – “What are your next steps”. Below is the situation that was in the February 2026 Newsletter.

FEBRUARY LEADERSHIP SITUATION

Fred owns a machine shop which he started 30 years ago. The Company does $7.5 million a year in revenues. Fred has a Mechanical Engineering degree from Texas A & M. He also is a degreed metallurgist. Fred never had any interest in financial matters; in fact, he has never even balanced a checkbook. Fred has always relied on others to run the business office and accounting departments. 

Fred also doesn’t think the business is large enough to have degreed finance or accounting specialists on staff; thus, the business' accounting department is staffed with one bookkeeper, who has been with the Company since it started and a couple of individuals with high school educations who have been with the Company for 20 years.

One day, the bookkeeper lets Fred know she is leaving the Company, effective immediately, to move to Florida to be with her aging parents who need health-care assistance. Neither of the accounting department employees are interested in moving toa leadership role, nor do they have the capabilities to do so. Fred decides to seek someone with an accounting degree from a temp agency to replace the individual who is leaving.

After about 90 days the temporary accounting department head comes to Fred and discloses a number of issues in the accounting department that are being and have been done incorrectly for years, and the Company has not been as profitable as past financial statements have reported. Further, revenues have been off the past year. Sales have dropped to $5.0 million, and cash flow is very tight; several suppliers have closed down their open accounts and placed the Company on a cash basis. Further, several customers have stretched out paying the Company, and there are a number of accounts receivable over 90 days past due.

What should Fred’s next steps be?

Please provide us a brief write-up of what Fred’s next steps? Send your write-up to Lynn Rosado at [email protected]

In our March 2026 Newsletter, a team of Silver Fox Advisors will provide responses to what he or she would have recommended to Fred that he should do based on the situation detailed above.

If you need assistance in becoming a better leader, I recommend you start by contacting the Silver Fox Advisors. Silver Fox Advisors are former or present business owners themselves, and they have leadership experience in running a business, and in some cases several businesses, and have dealt with unforeseen and unplanned situations throughout their careers. We encourage you to visit our website at www.silverfox.org to select a Silver Fox Advisor and also to learn more about the Silver Fox Advisors, as well as our great programs and community outreach endeavors.                                                                                                                                                                     

Typical Business Problems Owners Face

Typical Business Problems Owners Face

Chuck Hendee
A Silver Fox Advisor

Insights from 42 Years of Ownership and Coaching Experience

Over four decades of managing my own company—and through numerous coaching and advisory engagements with small business owners—I’ve seen the same challenges surface again and again. These issues are rarely about effort or intelligence. They are structural problems that quietly limit profitability, growth, and sustainability.

What follows is a summary of the most common business problems I’ve encountered, along with practical approaches that have proven effective across industries.

Profitability and Cost Control

Many owners struggle to clearly understand what actually drives profitability. Overhead often grows without discipline, expenses are not tied to specific sales or product categories, and visibility into true product or customer profitability is limited.

The most effective organizations take a disciplined approach to cost visibility. They assign overhead intentionally, analyze profitability at a meaningful level, and establish clear financial boundaries between business and personal spending. When costs are understood and managed deliberately, profit becomes predictable rather than accidental.

Financial Management and Accountability

A frequent issue is the lack of accountability between estimates and actual results—particularly with labor and inventory. Financial reports may arrive late or fail to reflect reality, making it difficult to correct course.

Stronger businesses operate with structured budgeting, review actual performance regularly, model labor based on real data, and maintain tighter inventory controls. Using accounting methods that reflect economic reality—not just cash flow—provides clearer insight for decision-making.

Leadership, Delegation, and People Management

Owners often remain deeply involved in day-to-day operations because systems are undocumented, training feels inefficient, or accountability is unclear. This leads to micromanagement, bottlenecks, and leadership fatigue.

Organizations that scale successfully invest time in documenting key processes, training people by role, and establishing clear expectations. Delegation becomes easier when responsibility is supported by systems rather than memory or habit.

Vision, Measurement, and Alignment

Another common challenge is the absence of a clearly communicated vision supported by meaningful metrics. Managers may work hard but in isolation, with little connection between daily activity and financial outcomes.

High-performing teams align around a shared direction, measure what matters, and communicate across departments. When goals and metrics are visible and connected, collaboration replaces silos.

Sales, Marketing, and Operating Consistency

Inconsistent results in sales and operations are often tied to a lack of documented processes. When success depends on individual effort instead of repeatable systems, growth becomes unreliable.

Businesses that perform well over time document how work is done, review results regularly, and refine processes deliberately. Consistency creates stability—and stability enables growth.

Closing Thought

These problems are not unique, and they are not a reflection of failure. They are predictable stages in the life of a growing business. In my experience, progress comes not from working harder, but from building clarity, discipline, and systems that allow the business to operate with intention.

Chuck Hendee
Business Growth Pathways by Hendee