Business Tip of the Week: Strategy/Monitoring
by Gareth Cotten on 23/04/10 at 1:26 pm
1 comment
Know your early warning signs. Many business owners and managers are too busy working ‘in’ their businesses to take the time to do consistent monitoring of every aspect of their business. When a major crisis or disaster hits, though (like a cash-flow crunch, or the loss of a major customer), they simply cry into their beers and claim they could never have seen it coming.
Being able to identify early warning signs is an essential tool or skill to avoid having to deal with a disaster, and could save your business from tanking completely.
Take Van Halen (the band), for instance. They had a clause in their contract that, for all performances, they had to have a big bowl of M&M’s backstage, with all of the brown ones removed. Most saw this as the ultimate diva behaviour, and battled to understand such a ridiculous request. What it was in reality, though, was a brilliantly simple test of whether all the other requirements of the contract were going to be adhered by. They had, for example, very specific requirements for their sound rigging, which had been laid out very clearly. It would have taken them ages to personally check every connection point and amp at every concert, but it was obviously massively important that it was done right.
If they found brown M&Ms in the bowl, though, they knew that there was a strong likelihood of other requirements not being met, and would then have to take the time to double-check all the equipment. The M&Ms, then, acted as their operations early warning sign. What are the early warning signs in your business, that could indicate more digging is required? Is your days inventory growing every month? Are your debtors taking longer and longer to pay you? Are you getting more customer complaints filled out on your comment cards?
Whatever they may be, identify your particular early warning signs, and watch them like a hawk…
Gareth Cotten is one of the growing breed of SA entrepreneurs with that ‘world-domination’ look in his eyes. Gareth runs the coaching and consulting practice 'Good Advice'. Gareth is also the 'course convener' for the University of Cape Town (Law@Work) Start and Manage a Small Business course and the University of Cape Town Basics of Financial Management course. View more articles by Gareth Cotten.
Darren
Apr 23rd, 2010
Yeah, excellent advice Gareth. I like the van Halen analogy, hadn’t heard that story before. Since we don’t have crystal balls, M&M’s will have to do!