ICS Magazine

"Good" Worry - How It Can Help You

July 12, 2007
"Go where they aren't" by expanding into niche services


“Only the paranoid survive.” - Andrew Grove

Nobody ever said being in business on your own would be easy. Nobody was right. During my 20 years down in the trenches I veered from agonizing fear to fretting worry to wild exhilaration, sometimes all during the course of one sleepless night.

Last time we examined where the gnawing doubt, fear and constant negative worrying comes from – the unexpected and unpredictable “bad stuff” that sneaks up on you without warning. And we covered seven points on how to cut to a minimum this bad stuff – thereby minimizing the paralyzing dread and managerial dilution of “bad” worry. But remember that all worry is not bad.

“Good” worry helps you avoid complacency and, trust me, complacency has destroyed more entrepreneurs than a little healthy worry ever has. Good worry just means anticipating the worst thing that can happen … and having contingency plans in place to block it or at least minimize the damage when things do “hit the fan”! Here are some examples of anticipated problems along with the planned solutions that are anticipated by good worry:

Problem: Personal injury/ illness/ death. Wow! Nothing like starting off with a bang! Obviously owner-operators working solo on the truck have the most to worry about with these ugly scenarios. Solutions?
  1. Grow. If you have both the chutzpah and the management skills, then grow your business large enough to achieve what I call “Critical Mass.” When you have reached the happy state of CM, it means your company has enough financial and management depth that the untimely departure of any one employee (especially you!) will not unduly affect it. Another huge advantage of CM is your company will have much more value to a prospective buyer.
  2. Insure. If you choose to not go the CM route (read: “not hire employees”) then disability and life insurance can step in case of your untimely departure. Good disability insurance is expensive (you certainly don’t want “bad disability insurance” do you?). But remember that growing your company large enough to achieve enough CM so that you don’t need insurance exacts a big personal toll too. One way or the other, everyone pays. And don’t forget that, unless your name is Bill Gates, everyone needs health insurance for catastrophic medical issues.
  3. Strategic partners. The “friend in need” concept is very valuable for owner-operators. If you are successful then, sadly, your local competitors probably resent, fear and envy you (and of course, there is no doubt on your success, since you are reading ICS magazine!). However, instead of continuing this silly cycle of suspicion, why not identify your best competition and offer an olive branch by sharing work you can’t handle? Suggest an informal arrangement where in times of need each “Strategic Partner” will look out for the other’s interests. For example, if your SP’s truck breaks down, you will fill in for him – being sure to charge for your time and expenses – while he collects a reasonable profit for having marketed the job. A Strategic Partnership will not only give you peace of mind and an essential financial back-stop in an emergency, you may even become friends with your competition. (Remember that a Strategic Partnership is not a formal, legal partnership. Entering any formal partnership is fraught with many perils and I seldom recommend them.)


Problem: Lack of work/ cash flow. This one can crop up and hit even the best-run operation. For example, many of our Strategies for Success members reported virtually dead phones for weeks after 9/11. Residential carpet cleaning is an emotionally driven event using discretionary income. When people are either distracted by a great tragedy or fretting about their future income, they just are not going to schedule carpet cleaning, period! Solutions?
  1. Nest egg. Running a small service business inevitably is an unpredictable and scary ride. Don’t make it worse by living on the edge financially. As a self-employed individual you should have six months personal living expenses stashed away in safe, liquid investments. Don’t have this much? The answer is simple. Good worry will motivate you to either spend less or charge more (or do both) until you have six months expenses tucked away. Start today. You should also have a business nest egg too. If not, then at the very least you need…
  2. Good credit. More years ago than I like to remember, a trembling 23-year-old neophyte carpet cleaner sat across the desk from his forbidding banker who asked, “Well, son, if I loan you money for this new-fangled thing you call a ‘truckmount’ will you pay me back?” Thus started my credit history as a small businessman. Sioux’s and my rule on borrowing was simple: we never borrowed for consumer goods (when we moved to the Dominican Republic after 20 years of marriage, we still were using the secondhand bedroom drawers we paid $10 for as newlyweds!) But on the other hand, if we were positive that we could pay off the business loan and make a profit with the equipment, we would cheerfully go into hock! Having an excellent credit rating (and a great 20-year relationship with my original banker) also allowed me ready access to operating capital when our cash flow occasionally dried up.
  3. More eggs in the basket. Homeowners are notoriously flaky and disloyal. So widen out your markets. Look seriously at developing a regular contract commercial route with jobs that you clean monthly or quarterly. These accounts will give you a cash flow base that comes in no matter what happens on the home front. And don’t let it just be one or two “big eggs.” Good worry tells you to not just diversify your market but also your clients. A good rule of thumb is to not allow any one account to provide more than 10 percent of your growth. A 5 percent limit is better. It is just so easy to get complacent as an enthusiastic commercial property manager heaps more and more work on you. But good worry reminds you that this work is only as good as the tenure of your contact. And how many jobs has this property manager had in the last 10 years? Gulp!


Problem: Heavy competition and low pricing. Ah yes, the bane of our industry. I’ve never seen another group of business people so intent on committing “suicide by mass media advertising” as price-cutting, bait-and-switch carpet cleaners. Is it any wonder that so many homeowners have come to view carpet cleaners as a commodity separated only by low price? Solutions?
  1. Raise your prices. Yes, I know. Charging even more when the competition already is cheaper than you seems wrong headed. But there is a large group of people out there who actually search for higher priced service providers and instinctively reject the price cutters. Now of course, you must also dramatically increase your customer’s “perception of value” by providing value-added service. But trust me, by increasing your prices and the emotional satisfaction of your high-end customers, both of you will be happier.
  2. “Go where they aren’t.” I believe it was Joe Namath who, when asked why he had so few interceptions, replied, “Well, I guess I throw where they ain’t!” Not a bad strategy for you either. If you are getting pounded unmercifully in residential carpet cleaning by cost-cutting bait and switchers, “throw where they aren’t” by expanding into niche services. Ceramic tile and grout cleaning, upholstery cleaning, wood floor maintenance, deck restoration and refinishing, pressure washing, auto detailing and, of course, what may be the most profitable service out the for carpet cleaners – water damage restoration.
  3. Consistently make Cheerleaders. You certainly don’t want to beat price cutters at their game – doing it (or at least advertising it) cheaper than anyone else. However, you can totally blow away your competition by consistently creating Cheerleaders – customers who are so blown away by the level of service you have provided they delightedly serve as unpaid salespeople for your company. Create enough Cheerleaders as an owner-operator and you will make a very comfortable living. After all, simple fear of financial disgrace and bankruptcy should motivate you as the owner of the business to make Cheerleaders! However, good worry whispers in your ear that bad stuff can happen to you personally (injury/ accidents/ sickness) and cut short your years on the scrub wand. So next month we’ll discuss how to clone yourself so that your employees will work the same Cheerleader magic you have always performed instinctively, and you will retire wealthy.