When your business is stuck, unable to get to the next level, or it encounters an insurmountable business problem, consider this.
If you had to redesign your business today with no constraints, how would you do it? Many business problems result from all the processes, procedures and models that we’ve put in place. Once there, they become part of the company culture and, unfortunately, seem unchangeable.
And yet, owners or top management forgets that they created these roadblocks and are hesitant to remove them.
One business owner was confronted with such an issue. He realized that his business was going to fail, and he would lose everything. He brought the problem to his Vistage Group and asked his peers for their counsel and advice.
He wasn’t expecting them to save his business. But that’s what they did by asking a simple question: “If you had to start over again, how would you redesign your business?”
The member answered by stating the number of people he would employ, the positions he would fill, the facilities he’d use, and the processes he’d change. At that moment, he realized there was an answer. But he needed the fortitude to make those changes.
It takes courage to make changes
It’s easy to trick yourself into believing you can’t change the components of a business. Yet many areas can be modified depending on your level within the organization. The challenge is to have the courage to make the changes.
It leaves the decision-maker with a simple gap analysis, one of the most simplistic forms of a business or strategic plan, which can be summed up as follows: “Where am I, where do I want to be and how do I get there?”
Determining what change is necessary and how to implement it is difficult for three reasons:
- An unwillingness to change.
- Political or family restrictions that might overrule the change.
- The inability to see that the change that is required.
If you search online for “small business failure,” you’ll find many different examples in which companies went in the wrong direction. Consider these instances that have resulted in business failure:
- Failure to establish and communicate company goals.
- Lack of vision and purpose by the principals.
- Poor market segmentation and strategy.
- Competition or lack of market knowledge.
- Over-dependence on specific customers or individuals in the business.
- Lack of management systems.
- Absence of a standardized quality system.
- Lack of financial planning and review.
- Inadequate capitalization.
- Owners or leaders concentrating on the technical rather than the strategic work at hand.
It’s easy to confuse cause and effect with lists such as these. Keep in mind that the items above are symptoms.
The main culprit
For almost all businesses that fail, regardless of the company size, the main culprit or cause is ineffective, dysfunctional or incompetent management teams. It’s easy for a management team to be blindsided by a competitor, technology or dysfunction. Overlooking any of these areas is one of the most fundamental reasons companies should have an outside board (comprised of people from outside of the company) that’s credible and persuasive to help management recognize potential problems and opportunities.
That kind of group can help your organization redesign itself and identify areas that are holding you back or opportunities that should be pursued. You see this all the time within the National Football League. Management tries to secure impact players for the current season as well as the future. When fans complain, critique and wring their hands over the future success or failure of the next football season, the team makes roster changes.
The lesson is simple.
Don’t let the failures or successes of the past obstruct your future success. Critique your business as if you had to start again and see what changes you’d make. Once you identify the changes, ask yourself if you have the courage to make them happen.
Jim Lindell is president of Thorsten Consulting Group, providing strategic and financial consulting, professional speaking, training and executive coaching. He is a Vistage chair and responsible for two CEO groups in the Milwaukee area. He is the author of “Controller as Business Manager,” the AICPA courses “Annual Update for Controllers” and “Analytics and Big Data for Accountants,” and many other courses on financial leadership. Contact him at (262) 392-3166 or jim@ThorstenConsulting.com.