Quick Note: If you haven’t been following our Fix This Next series I really recommend you review the business hierarchy of needs.
We read a lot of comments about business ownership, and I don’t just mean us at Sooter Consulting, but you do as well. It’s a popular topic and there are surprising statistics to discuss. The failure rate of new businesses is one, and of course the constant flux of ‘fixes’ developed by one guru or another. The theme I see in these comments is fairly clear: “Why am I still fixing problems I thought I already fixed?”
Understanding the complexities of business can directly impact your profit.
To apply some ‘Fix This Next’ language to this: Why do some business owners seem to constantly scramble up and down the business hierarchy of needs? I believe I know the answer: It’s a growth problem. Most businesses tend to become more complicated over time. For example, ten years ago Sooter Consulting was mostly a bookkeeping company. We primarily worked with insurance agents, and thought that was an infinitely scalable idea. How did that turn out? Now we offer Profit First coaching. To make matters more complex, we’re working on a plan to offer Profit First coaching as a group workshop. All of these moves are logical healthy moves that move us towards our goal. However they also make Sooter Consulting a more complicated business. Now we need to make sales for these services… ensure those services are profitable… not to mention the deliverables.
It’s natural that we must scramble back down the hierarchy and solve the issues that arrive with any new service. How has your business become more complicated?
Here are some tips on mitigating the stress of complexity in your business.
- Before launching a new product take a “test run” and allocate a percentage of your profit to an account dedicated to that project. This ensures your profit is healthy enough to sustain your business’s evolution. Check out our series about Profit First on Youtube to learn more.
- Ensure linchpin redundancy. Go through every employee, system, and vendor and ask yourself: If they left, could my business survive? Remember, they make up part of your business’s foundation and before you complexify you ought to have some redundancy in your business.
- Never forget your queen bee.
- Remember to critically examine your business frequently and solve problems before you are forced to solve a problem.
Keeping these tips in mind, your business should develop a natural resistance to critical failures in your business’s needs. As you can see the majority of these tips deal primarily with profit and order. We have a tremendous amount of articles published on these two vital needs on our website, find them here: Order using Clockwork, Profit First.