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How_to_Avoid_Nasty_Business_Surprises
| How to Avoid Nasty Business Surprises
Conducting business in the 21st century often requires quick
decisions. This often leads to sound data being replaced by
perception as the basis for making important resolutions. The
risks in this approach are clear: business decisions made
without a solid grounding in reality can lead to disaster.
Last week, the former head of collapsed Australian insurer HIH
made a startling admission. He said that 'gut feel' had formed
the basis of HIH's decision to takeover its smaller competitor,
FAI. The takeover turned out to be a grave mistake - and a
significant contributor to the demise of HIH.
Now this was a Big Decision with Big Consequences. But smaller
examples abound and while they might not send businesses broke,
they can easily result in nasty surprises and wasted money.
Equipment purchases, hiring of extra staff, advertising
campaigns, moving to bigger premises, etc. etc. Decisions to do
any of these are often based on perception, impulse or 'gut
feel', rather than on even the simplest analysis.
This should not be surprising. On one hand, we make personal
buying decisions every day based on perceptions enhanced by
marketing. It is part of our modern conditioning.
On the other hand, despite the fact we live in an age of
abundant information, only a selected few have learnt how to use
that information effectively. For most, doing even the most
rudimentary analysis seems all too hard. Perception wins out -
and another riskier-than-necessary decision is made.
The solution to this problem is simpler than you may think. You
need to learn the mystical art of analysis.
"That sounds way too complicated!" I hear you cry. It needn't
be. Chances are most of the basic analysis you need can already
be done by your computer.
For example, almost every business these days captures basic
information about their sales in their bookkeeping software.
With a couple of clicks, you can generate a simple report which
will tell you what percentage of total sales has come from each
customer and/or each product or service you sell. (If you don't
know how, ask your bookkeeper or accountant).
Armed with this simple information you might revisit your
approach to marketing (how can we attract more of the bigger
customers?), to customer service (are we looking after the right
people?), to product/service range (is the effort needed to
manage the small products worth it?), and so on.
This sort of simple analysis is best learnt by doing. With
practice, you will start to ask yourself "what information could
help me with this decision?" and get quicker at finding that
information.
You will gain a better understanding, and more control, of your
business. You will shun perception in favour of facts. And you
will have fewer expensive surprises.
(Discover how to find your business' deepest secrets using
simple analysis. Visit:
http://www.businesssimplification.com.au/actions/analysis.htm)
© David Brewster, August 2002
http://www.BusinessSimplification.com.au;
mailto:feedback@businesssimplification.com.au
About the author:
David Brewster helps people in small business who are struggling
with their workloads and would like to separate themselves from
the daily grind. He helps develop strategies which reduce wasted
effort and allow effective delegation without reduction in
quality or service.
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