Epoxy opinion - why small coating companies fail

Just about anyone can give you the typical reasons why most small businesses fail, e.g. poor cash flow, insufficient capital, staffing problems, legal issues etc.

What I wanted to talk about here were three relating specifically to small coating companies that business coaches and other experts couldn’t tell you about – the ones you only discover as a business owner.

Having been an owner myself for the past 15 years, I know more than most about what can go wrong. I’ve faced just about every challenge possible and lived to tell the tale; I’ve also seen plenty of others that weren’t so lucky with their business. With my naturally inquisitive mind, I’ve learnt a lot from their stories and have been able to pinpoint some not-so-obvious reasons of my own as to why they didn’t survive.

Here are three you may never have considered.

Business owner thinking about company failure.


Not in touch with their purpose


For me, the single biggest reason why most companies fail – not just the small ones – is they aren’t in touch with their “real world purpose”.

“What the heck is that?” I hear you say. Trust me, it’s NOT some wacky spiritual theory I’m talking about here. It’s actually a very practical tool anyone can use if they spend the time figuring it out, and the best way to start is by simply asking: “What is it that I instinctively do? Is there something I have a natural flair for and perform effortlessly compared to others?”

This type of personal exploration does a number of things, but in a business sense it’s pure gold for gaining clarity on your true assets and the direction you should be taking. Once this is understood, the owner needs to make sure the rest of the organisation is completely aligned. If the people you employ don’t have the same basic drivers at their core, you’ll be locked in a never-ending battle to get everyone pulling together and the business will suffer.   

A full discussion of how this real purpose works is beyond the scope of this article, however if you’d like to know more, please get in touch and I’d only be too happy to talk about it further.

Spread too thin


The second major contributor to small coating company failures is what I call the take-on-all-comers syndrome.

As the name suggests, small companies tend to take on every bit of work that comes their way through a rational fear of not getting enough. They constantly re-shape their business on the run and stretch across as many markets as possible just to make ends meet. When it comes to coating companies, they often find themselves both supplying and applying in the industrial, commercial, retail, residential and any other fields they can find.

Unfortunately, biting off too much like this always proves counterproductive because all you end up doing is spreading yourself too thin and exhausting your time, energy and other resources. In addition to that, your brand becomes diluted and doesn’t stand for anything in the eyes of the market.

Personally, I think this type of behaviour is even worse in the coatings industry because of a reluctance to partner. We tend to think of everyone as the enemy, ferociously competing against us for every sale and every client. It’s the classic “us v them” mentality and when combined with the “smoke and mirrors” stuff that also goes on you can see why coating companies don’t share anything other than sales talk.

Following the wrong path


The third and final reason I want to highlight ironically comes after the business owner starts to think they’ve actually made it. It’s a cruel world, isn’t it?

The mistake many make here is getting sucked down the traditional growth path in our industry, which in my opinion is rarely the best way forward. To explain what I mean, I’ll tell you about my own growth experience and a moment of inspiration that changed my thinking on this topic forever.

A few years ago now I was walking through our finished goods warehouse and surveying the bays of pallet racking in front of me, full of product ready to be sold. We had 45 different products, 25 different colours, countless additives, application tools...you name it. The place was full to the brim. I crossed over to the manufacturing side and, once again, there was pallet racking full of raw materials, drums, bags and buckets; not to mention all the manufacturing equipment itself. 

I had made the same walk through my factory a thousand times and felt great about the “growth” in front of me, however this particular day something inside clicked. I suddenly saw things differently. Rather than healthy progress, all I could see and think about was tied up capital – not just capital, but profit.

The money I had invested and re-invested over the years was building the business, but where would it end? We were already starting to outgrow the building and planning the next phase with more space, stock, equipment, staff and even more money ploughed into it. My new-found scepticism quickly turned to into a cold sweat when I started wondering what would happen if the market suddenly collapsed. I would have heaps of stock, equipment, staff and capacity, but no way to pay the mountain of bills that had also grown with the business.

I decided right then things had to change. Unfortunately not many businesses get the chance to pull things up like I did and the boom-bust cycle eventually plays out.

So there you have it; a short summary of three major contributors to small coating company failure I’m sure not everyone talks about in risk management strategies. What do you think? Can you relate to the affect they’ve had or are having on your business?


Take care and keep smiling,

Jack