Most financial problems you face are temporary, and your business drivers may not be what you think.
Most problems are only temporary but can cause immediate pain
And we often let this pain drive our choices and actions.
- The bank manager wants to withdraw your overdraft facility.
- Your biggest customer and debtor defaults on a payment.
- The business has been losing money for months and you don’t know what to do about it, causing irrational decision-making based on financial problems.
- And so on.
Many people make choices they wouldn’t normally make, and the drivers are based on financial problems. When you let the financial problem be the driver the decisions, you make are usually based on band-aid solutions. Financial problems are usually symptoms of much bigger issues you should be addressing that will be better drivers of your business.
“How can you avoid continuing financial problems and frustrations if you don’t know and understand the real drivers behind them”? Peter Sergeant
Your values should be a key driver of your decision-making and problem-solving
Let my values drive my choices. That doesn’t mean you ignore other aspects of your decision-making processes. What it does mean is that you are more likely to make better decisions that are associated with your purpose, vision and objectives.
This will be particularly so if your values and that of your stakeholders are congruent.
Financial problems are usually created because of a lack of working capital
Decisions to purchase extra stock, to take up a special discount offer, to respond more promptly to a customer request, cancelling a customer seminar are examples of decisions made with the financial considerations.
Making better choices are often a matter of choosing better between several options. The important thing is to be driven by customer service to look after the longer-term and sales to look short-term customer demand.
This means that one of the key drivers in your business should revolve around improving the working capital situation.
Your business model, business plan and value chain are key drivers
If you don’t take the time to relax, think and reflect on the way your business is operating, struggles will continue and the next thing you will be in crises management mode.
If you don’t know where your business is headed it becomes very difficult to make sound decisions. Without good planning, it becomes too easy for the business to run off the rails compounding financial problems. If you run out of cash, that is a symptom that should be revealing other more serious problems.
Knowledge management should be another key driver
Most small enterprises devote little time and resources to their information and knowledge management. Much time and money are wasted fixing the same old problems in the same old ways.
Shouldn’t happen, when most businesses have the information and knowledge they need, if only they could find it in a timely manner. Solving the same old financial problems in the same old way can be rectified with the easy access people now have to new ways and means.
Technology could well provide the drivers you are looking for
Modern technology such as cloud computing, social media, inbound marketing platforms, analytics, 3D printing, robotics, IoT, and being able to harness big data are all examples of technology that can provide you with far better drivers for your business than have ever been available before.
[read more=”Personal Experience” less=”Personal Experience”]
I believe that the reason financial problems are a key driver of decision making is because the functions of the business and all the strategies and actions are not in alignment, particularly with the values of the organisation.
Far too many decisions are made by the seat of the pants, just to solve a particular financial problem.
When making decisions, try limiting your options as limitations on finance can often lead to more creativity and innovation as a driver to solve a whole range of financial problems.
If employees know there are restrictions on spending they will usually respond positively. If they are not kept informed, well, more problems tend to emerge and the struggle continues.