By Sandy Cody
When the Going Gets Tough: 3 Steps to Solve Business Problems
The difficulties that a business or non-profit may experience can take many forms. Learn these problem-solving steps to deal with declining revenues, loss of customers or clients, increasing costs, low employee morale, and slow response in providing a product or a service.
Recognizing Business Problems Exist
How does an organization begin the process of getting out of trouble? The key first step is that the owners and/or managers must recognize that there is a problem, that it did not develop overnight, and that there is no single cause for it. The “single cause” theory may be the most obvious or most irritating, but it is usually symptomatic of some broader-based and more deeply rooted problem or set of problems.
Review Your Business Plan
The second step to take is to review your business and strategic plans. Have you been following them? If you haven’t, or don’t have such plans at all, this could be a major contributor to your problem.
Define the Problem Scope
The third step is to clearly define the scope of the problem. To do this effectively, you must assess your entire organization – and not skimp on this analysis. It is the most important piece of your problem solving – and if done properly – will lead to sound decision-making. Examine all systems, all processes, all departments, programs, services and product lines. Break down all of your business operations into their component parts, examine each component in detail, and analyze how each one relates to the other components in the process. Don’t forget to look outward as well as inward: evaluate what and how your competitors are doing and survey your customers.
Don’t forget about your employees: it is vital that you bring them into the process. After all, this is their business, too, and they know a great deal about it. Many – if not all – of them know what the problems are, and probably have some very good ideas about how to solve them. If you involve them from the very beginning, they will also “buy into” the solutions and help fix the problems with enthusiasm and determination.
Solutions to Solve Business Problems
Once you have figured out what the issues are, the fourth step is to prioritize them. Some problem areas will be amenable to a quick fix, while other solutions will have to be phased in over time.
What are some specific actions you can take to deal with specific problems?
Expenses outstripping revenues
Are your expenditures are out of line with your revenues? If so, then you must examine possible cost-cutting measures. While reducing staff or freezing wages may be tempting, take a close look at your daily, weekly, monthly and annual operating costs first.
Analyze how you use your telephones. Can you cut local and long-distance telephone charges with a different plan or another carrier? Look at your firm’s system of purchasing supplies. Are you taking advantage of volume discounts? If you share a building with other businesses, ask if they want to participate in a joint purchasing program. Can you defer any proposed equipment purchases for another quarter, another year, or indefinitely? Get rid of your company credit cards. They are just too convenient and tend to be over-used. Create a purchase order system or a pre-approved expenditure plan. You will be surprised at how much money can be saved.
Revisit your insurance and employee benefit plans. Even if your policies are not up for renewal for six months or more, start shopping around now. Keep your property and equipment inventory up to date. Be sure that equipment you have disposed of is not still being insured. If you are renting your space, talk with your landlord about the possibility of a temporary rent reduction or even a short-term abatement of rent until conditions improve for your business.
Finally, look at planned wage/salary increases; they may have to be deferred for the foreseeable future. Explain this freeze to your staff in an honest and forthright manner. Most employees will understand the situation, will appreciate being able to keep their jobs, and will be more accepting of pay freezes or even pay cuts than cuts in benefits. Try to avoid taking that latter step unless your “back is up against the wall.”
Employee productivity and morale
If you discover that employee productivity is an issue and that this problem is related to employee morale, then it is all the more reason to make the employees part of the decision making and the problem-solving process. We suggest that you address the challenge of bettering performance by continuously improving processes, cutting costs, and increasing output. These changes mean going beyond the traditional management systems and creating a culture (an attitude that accepts and implements continuous improvement) that focuses on and involves both a company’s internal and external stakeholders.
Loss of customers and market share
If you have lost customers and market share, then it becomes critical to find out why. Survey your customers and look at what your competitors are up to. Why have your customers left you? Have your competitors introduced new products and services or reduced their prices? Have they responded to changes in your industry or the economy that you have ignored? Have they embarked on new marketing or PR efforts that have brought them recognition? If so, then you will have to do some rethinking. Even in tough economic times, you must find ways to “keep your name out there” so that when the economy improves, your customers will have you in mind.
Don’t forget your plan
Revisit your business or strategic plan. If it is still as valid as it was before, then follow it. Remember, it is not cast in stone and can be modified as circumstance warrant. If you don’t have a plan, develop one now.
While many companies have the capacity to solve business problems “from the inside,” many find that they are too immersed in day-to-day operations to work on the issues that confront them. Don’t be afraid to ask for outside help. There are many competent specialists with the experience and skills to solve business problems objectively. The most important thing to remember is not to wait. If you discover that you are getting into trouble, act quickly.
Sandy Cody, president of Draker Cody, Inc., has more than 30 years of management and human resources experience and holds a Masters Degree in Management with a focus on Human Resource Management and Organizational Development.