Tips For Taking Back Control Of Your Business
We have all seen it before: managers running around, looking and being busy. They have an exhausting day and go home with the usual jargon: back-to-back meetings, no time for lunch, fighting fires, just managing to keep heads above water, and many more.
They believe that they are doing a good job, working hard and if there is a problem it is rarely their fault.
But the stress increases, erratic behaviors are observed down the chain, performance deteriorates and the business enters the world of chaos. How does this happen? For the few who recognize that chaos is well entrenched, most surprisingly admit that it just happened. It sneaked up on them.
The challenge is to now restore order.
How does it happen?
There are many factors that contribute to chaos reaching a level where control of the business is lost.
The result (without fail) is worsening financial outcomes. It can be diminishing revenue, increased costs and reduced profits (or increased losses). A common response is to work harder but often that leads to less efficiency, more stress, more errors and it cannot be sustained for long.
There is not one single explanation. It could be a range of factors: competition, economic events outside the company’s control, staff performance, poor quality, market influences, government tariffs, cost increases and many more.
Staff often feel like a very tired boxer who keeps swinging but no longer packs a punch. But recognizing that there is a problem is a major step forward.
Admitting that something must be done about it is the first step towards recovery.
How can I fix it?
You cannot fix something if you don’t know what is broken. Three simple steps with an acronym that is easy to remember: MAD
Numbers and facts tell a story but most businesses do not listen. Most managers deal with the problems that the businesses face by ignoring the signs and blindly believe that good times are around the corner.
Face it head-on: measure everything. Regardless of the product and service, no staff, no business.
Look at the staff, their experience, the hours they work, their knowledge and qualifications, leave owed to them, wages and increases over the years.
Look at customers and orders, delivery quality of service, repeat orders, new vs established customers, the market in general. Look at products vs competitors, costs vs sell price, exchange rates if applicable, government regulations.
Look at overheads and expenses. Look at everything and gather information.
Armed with this data, the next step is to analyze what you have gathered.
A daunting task but not impossible if approached sensibly. Don’t get caught up chasing minor blips. They have little effect on the business.
Look at trends, the big picture. If revenue dropped when a new competitor entered the market, this is something worth investigating further.
Chart revenue, costs, profits and look at what could have changed to create a downward trend.
Common areas that can trigger change is loss of staff, currency fluctuation, business confidence created by political uncertainty, products are no longer competitive or no longer address market needs.
List your areas of concern in order of importance and drill down. Assign estimates to the various causes as a percentage and focus your attention to the major issues.
For example, if lost revenue is attributed to a new competitor, understand their product and how you can address the shortcomings as seen by the customer.
If a revenue reduction is attributed to the loss of key staff, look at the current skills and knowledge base of current staff.
One thing is for sure, if you don’t make a change, nothing will change. The spiral of chaos will get worse and eventually the business will implode.
In our next blog, we will explore how simple steps can be implemented to improve performance and start the journey towards growth and increased profitability.