Sometimes Things Don't Go According to Plan When You’re a Business Owner
In business, there are so many things that can go awry. Your industry can take a hit. Your employees can quit. Your customers can change their minds. Inventory can be delayed or an event can get rained out. The list goes on and on.
So what are you to do? My recommendation, as with all hard things, is to take one step at a time. The step I take first when something goes wrong is the smallest manageable step I can, I assess the damage. Assessing the damage helps me frame the problem and decide how to react. Is the outcome as catastrophic as it feels right now? My favorite way to put things in perspective is to look at my financials. Looking at the financial impact of lost customers or increased expenses and their impact on the overall business (read: cash flow) gives me the tools to take action.
Seeking a Solution When Something Goes Wrong With Your Business
Once I know there is a problem, I can identify the reason for the problem and I can act on solutions. For example, if the problem you are facing is lost customers, the next step is to assess the magnitude of the problem: how many customers were lost? Is it normal churn or a sign of a bigger problem? If normal churn, work to reduce churn, but don’t worry too much. If there is a significant increase in customer turnover, this may be a warning sign of larger problems in your business. If you are closely tracking customer turnover, you can identify this problem quickly and take action sooner, hopefully preserving hard-won customers by solving the cause of turnover.
When employees start leaving unexpectedly, I try to figure things out. Were we over or understaffed? Why did they leave? Was it payroll? Was it staffing? Both? Or worse yet—was there a bad boss? Was that bad boss me?
Paying close attention to when things don’t go as expected requires you to have an expectation of the way you expect them to go, also called a plan, or in financial terms, a budget.
Discovering What Went Wrong for Your Business: A Few Examples
There’s always a reason why business doesn’t go as expected. Sometimes it’s easy to diagnose this reason, and other times it may take months to figure out. But if you know something is wrong quickly because you are tracking the metrics, you are already on a quicker path to find out what went wrong and solve the problem.
Taking Things One Step at a Time to Get Business Back on Track
When things go wrong, know about it quickly by tracking financial warning signs (also called KPIs) regularly and don’t panic. And most of all, don’t close your eyes. Just take one step at a time and slowly piece together the puzzle of what happened and how to move forward.
If finding and tracking the correct metrics for your business to stay ahead of the game feels overwhelming, get help. The CFOs on our team can help you get to the root of the problem and diagnose it. And set your business up with a clear set of financial warning signs for the future.