I’m finally a CFO! I’ve worked long hours for 18 years in corporate accounting, finance, and auditing to be here. I just landed an executive role with a small flooring company and I’ve been tasked with establishing controls and processes to help the company run smoother and bring clarity with my ability to analyze the business results.

On my first day I ask the CEO and owner of the company (let’s call him Jay) “What is your shrinkage?” “What do you mean?”, he replied.

“How much of your inventory do you expect to be scrapped? You know, the amounts that end up being damaged or thrown away.“ I’m fully expecting a clear answer so I can move on from this simple conversation and start analyzing the inventory.

With a puzzled look he said, “Oh I don’t know. Maybe you can tell me what it is.” After a short pause, he had a thought. “Wait! If the guys in the warehouse are cutting the carpet properly, we wouldn’t have any scrap.” This was my first sign that I was in executive hell.

A few days later I noticed him in his office reviewing payables and completing bank reconciliations. Both tasks should be handled by administrative tasks, not the CEO. Sign number two!

The nail in the coffin was after I’d been with the company for four months. I put a dashboard together giving the CEO and his wife, the co-owner, a high level view of their business performance for the last 14 months to cover prior year and the first two months of the current year. Revenue and margins trends, Inventory turnover, AR turnover trends, etc.

I presented the results and pointed to some negative accounts receivable trends. After acknowledging they didn’t know their inventory trends or that the AR balance needed attention, they proceeded to tell me that this isn’t what they want from me. In their words: “This high level analysis is great and all but we hired you to get into the details of the business.” Um, what? The details?

Not only did they hire an executive to be in the “details”, they acknowledged that the high level analysis I produced was helpful in pointing out issues thew where unaware of in the business. It was confirmed, this is my dream job from hell.

At this point, I knew I was hired by clueless business owners.

I was astonished at the lack of business acumen a “successful” businessperson could have. With every conversation I became more frustrated working for people that had no clue how to navigate their business.

If they are clueless, how is this business surviving? How are they able to make consistent profits? What am I missing here?

Once I learned the background of the business, things began to make more sense. The father started the business in the late 70s and passed it on to his son in the early 90s. Based on our conversations, I doubted Jay had the ability to establish and grow a business of any kind.

More details about these clueless business owners emerged in later conversations. Jay would named drop Mr. Shaw. This was Robert Shaw, the son of Clearance Shaw, the founder of Shaw Industries, Inc., one of the largest flooring material manufacturers and distributors in the country. Jay’s father networked with Mr. Shaw and purchased carpet from him. That is an extremely important connection to have and Jay didn’t have to do anything to establish it. His father already did the work to establish a strong network.

Think about trying to establish your flooring business during the startup stage. Imagine trying to get in a room with Mr. Shaw as a relatively unknown business. How much would you have to spend with such a large manufacturer to be noticed? While you’re trying to build, idiot Jay has a personal relationship with the owner that spans over 20 years before he took over the business.

Jay was also a part of two co-ops. A handful of family-owned flooring companies joined to create a purchasing group that allowed them to buy materials with significant discounts. This increase in purchasing power preserved their margins.

These two instances taught me a valuable lesson. Your network is more important than your ability. You should strive to have adequate ability, of course. But how many opportunities do you miss simply because you’re like most people focusing 100% on your ability and 0% on your network?

I could outsmart Jay in every business scenario imaginable.

But he knew Mr. Shaw. I did not.

That would be the only reason I would lose and the only reason Jay could survive. I could criticize how he allowed the scrap carpet to pile up for years as a monument to how his staff “messed up” and how he didn’t really understand I had no network that allowed me to get preferred pricing, protecting my margins. I didn’t know the family of any manufacturing. I had no direct line to the top of any vendor I would do business with and he inherited that connection.

I realized it then. This is how an idiot can run a successful business. Jay was in such a position that the business could survive despite him, not because of him. All he had to do was not burn the building down and the system would work itself.

The property manager would place an order, the team would process and prepare the flooring. The contractors showed up every morning to pick up the carpet and install it at the customer’s location. They would pay. The orders would be placed with vendors at discounted prices. The cycle would continue even though he didn’t possess the ability to push the business into success. It already was.

Too often, we assume aptitude is the reason someone has success. Let’s continue to develop our ability but start to focus on building a quality network. How can your ability be seen if the right people don’t know who you are?

Let’s focus on how we build the network so we don’t miss out on reaching our full potential.

Joining trade associations is likely the most effective way to be seen by the decision makers in an industry. People aren’t paying to be in an association for a specific industry unless they are dialed in and committed to growing and networking within that industry. This is a must for growing a service-based businesses. Whatever industry or niche you’re in, you need to network with the people who have the ability to hire you or refer you to the one who could.

Chambers of commerce are you opportunity to rub elbows with the local playmakers. Chambers aren’t restricted to industries but rather a local region. The hunt for networking gold is likely to be satisfied in this organization.

Rotary clubs are where you’ll make the most meaningful personal relationships and stay aware of the happenings in your local business community. These clubs are local chapters of Rotary International. These service organizations are made up of local business owners and professionals. They meet as often as weekly to discuss specific concerns to the local community. They often invite speakers that have deep involvement in the community to share their perspectives and opportunities to help bring positive change.

These opportunities to network is what’s going to make the largest impact to your business success. It’s not your passion or your ability, though those are necessary. It’s your ability to leverage relationships with like-minded entrepreneurs to see and be seen by the right people.