Denis Healey’s First Law of Holes – “ When you’re in one, stop digging!”

A very good thing to keep in mind when you are Chancellor of the Exchequer. And also a very good thing to keep in mind when you’re in business.

Because, I have discovered, people have a habit of repeating themselves, especially when they are in some difficulty. The businessman thinks that if he works harder, the problem will get better. But often it is the method of working that is causing the problem. So working harder makes it worse quicker. So he works even harder, because he sees the problem getting worse, but he does not stop to think why. He is too busy doing when he should be thinking.

In this recession we are seeing the rate of personal bankruptcies and insolvencies rising. It’s no surprise – so many businesses were started in the boom years, and the owners have never experienced a recession so do not know what defensive steps to take. It’s such a waste when the business goes bust. The headline news is the personal bankruptcy and the redundancies. But that’s really just the tip of the iceberg. In the last recession a large housebuilder went bust in the south east of England, and 120 of its subcontractor firms went bust because of it. The same thing is happening now.

Apart from the personal tragedies, there is a collective pool of knowledge in any business which is now dissipated. So starting again is much more difficult for everybody concerned.

There is another, very common, issue when the business is failing, which is generally evidenced by business men rather than business women. The male of the species does not want his wife and family to worry, so does not talk in as much detail about the problems he is facing as perhaps he should. Then, when the business does fail, it is a shock to the family. His wife feels there has been a lack of trust in the relationship, and it puts it under even more strain than the business failure alone. So a failure in the business can lead to a failure in the relationship and the family as well. Such a waste.

So I think there are two points to note. Firstly, businessmen would benefit by being more open with their family. And secondly, they need to stop digging holes. To do that, they need to change the thinking. Or, at the least, stop and think. And if they cannot think of a better way of doing it, then they need to find someone who can.