Running a Small Business

Lesson 3: Organization and Planning

Identifying problems

Identifying problems is easy - something doesn't work, customers are complaining, there's no money in the bank or the building next door is on fire. Identifying problems early, in an organized way which will ensure the most effective response possible - that's hard.

The only way to identify problems when they're still small and manageable is to track those values which are important to your business and to immediately react when the value is no longer on track. Many businesses go along quite happily assuming that, if nothing obvious is going wrong, everything is fine. Instead, as far as the key values for your business are concerned, you should be looking for trouble all the time.

Each small business is different and therefore different things are important and different values should be tracked. But, if failure to achieve a particular target or goal will hurt your business, you should be tracking the corresponding values and activities.

Typically you should have revenue, profit and cost targets and you should be tracking them. Typically as well, they'll be off target most of the time and you should know why they are and whether it's cause for concern. In the example we've been using, we were tracking the progress of the tiny steps, the results of the work and the achievement of the overall goal of 20% profit increase.

If the work of calling your existing customers is not being done, that's a problem which puts in danger the overall result. It would suggest a response on one level. If the work of calling the existing customers is being carried out but you're not getting twenty new names and addresses a week, that's a completely different kind of problem and would require a change in strategy. If the work has progressed to where you should be booking profit and you're not, that's again a different kind of problem and you have to determine a focused response if your goal is still going to be achieved. Checks on all these values should either be scheduled with an appropriate frequency or you can delegate the checks and ask to be notified immediately when there is a deviation of a certain amount.

Problems mean something isn't working as planned. In travel, it means that the car has broken down or the road has been washed out. In business, you're often not in the car so you have to track values which show how much progress has been made towards your goal. Before, we were ensuring a level of quality, now we're ensuring a result. "Define", "Decide", "Carry Out" and "Check" is still the process but, for an on-going business it has to be continuous.

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