We Don't Know What We Don't Know
Aug 29, 2010
Today's world moves at warp speed. With all the information and technology at our disposal, weeding through what's important and what's not takes a lot of time. Further, with this explosion of information, many functions and tasks in business have become increasingly complex. Most successful business owners have motivation, inspiration, and a strong work ethic. They became very good at making things or delivering services to their customers better than the competition. However, many business owners become trapped as their firms grow because they can no longer concentrate on building their business because they get caught up in administrative tasks which sap their time. This time drain is a huge problem for CEO's and is compounded by increased complexity in the administration of many businesses. We wouldn't try to take out our daughter's appendix just because we were smart, hard working and industrious! We'd call an expert!
Although finance and administrative tasks may not require a PhD, they do require specialized knowledge. With increasing government regulation, expanding bodies of knowledge, and more competitive pressures, CEO's cannot afford to dabble in many administrative areas. It is not only unproductive but can be dangerous. In a phrase, we don't know what we don't know! In many businesses I have seen, many believe everything is well run and they don't know they have problems or are missing potentially huge opportunities until something happens accidentally or someone knowledgeable examines the situation.
I was working for a $100 million company when I saw they had a mix of C Corporations and S Corporations. Due to their tax situation, they were paying taxes on profitable C Corporation income but could not take advantage of offsetting losses in some of the S Corporations. When I asked about this, I was told this had been looked at it for 20 years and they couldn't fix it! A short phone call and $10,000 in legal fees later, we rectified the situation, saving the business owner an estimated $9 million in taxes! The point is don't try to do everything by yourself. You may get into trouble or miss opportunities- if not both. We have no way to know what we're missing if we lack knowledge or expertise.
We don't know what we don't know!