Avoidance issues? What’s the true cost of not doing certain business activities?
It’s far harder to measure the costs of not doing certain activities than it is to track costs of the activities you do undertake.
This is why business owners find it easier to cut costs than to commit money to new spending or investment. Tracking ROI can sometimes be difficult if not impossible but shouldn’t mean you don’t do something.
Investment and management are crucial to building a successful business
What would happen if you left the advisers in your practice to do things their own way? Chances are that the work would get done faster and could even lead to a short-term increase in revenue. But the trouble is, with everyone working to their own devices with no cohesion, you could find yourself with an escalating problem due to non-conformity, risk breaching the regulators requirements, or even go out of business.
Likewise, if your management team don’t meet on a regular basis to solve the bigger issues, you’ll probably be able to get through more day-to-day tasks on your to-do list. But, many of your current problems will persist down the years and, left unchecked, new ones will almost certainly build up.
If you fail to invest time and money to train and develop your team, adopt proper practices, follow clear practices, and utilise great technology, you may improve profitability in the short run. However, longer term you will only be devaluing your business, including its saleability and likely lose decent staff along the way.
Don’t let accountants run your company
You’ve probably heard people say, “Don’t let the accountants run the company.”
While this may seem harsh, the point is that in larger organisations most accountants are aiming to solve problems by cutting costs. Of course, reducing staff numbers or slashing budgets will have an immediate impact in the short term, but what’s the true cost of this ruthless approach likely to be down the line?
For example, this approach could have a negative effect on your customer service standards. The problem may not show up immediately, but it will eventually and could prove terminal.
This isn’t good business.
Reducing your marketing spend may make your short-term P&L sheet look brighter, but at what cost? What happens in 6 to 12-months’ time, when fresh leads aren’t coming in?
You can re-establish your marketing efforts, but this will take time and probably cost more than you were spending before. Building momentum takes time and effort before it starts to generate results.
Again, by cutting costs now, you’ll be left with an expensive problem to correct later. And you may have a ticking-clock adding pressure to make your marketing work, which won’t help matters.
As you have seen, the true cost of not doing certain activities, or ceasing to do them, are hard to measure. However, the smartest business owners realise that not everything can be counted.
Look at ways you can excel to retain and attract great clients
Rather than holding back on investing in your business or cutting costs, look at ways you can make a positive impact with your staff and clients.
Thinking this way can change everything.
To help get you thinking the right way, here are a few areas to focus on:
1. Strategic thinking – evaluate the problem you want to solve, or area that you want to focus on, think about the people you are doing this for, and create an organisation that exists to get better at doing it.
2. Execution skill – take your strategic vision and bring it to life, one step at a time. Clearly articulate your vision and share it with your staff. Then develop a strategy on how it will be achieved followed by specific plans for each focus area. Then execute…
3. Team building, development, and retention – assemble the best group of people you can find, look for people who can function effectively as a team and deliver amazing outcomes for your clients. Having done the first two steps, you will find this much easier.
4. Marketing and communication – spread the word about what you do, who you do it for, and why it’s great. Doing steps two and three will make this much more effective and drive better quality and greater referrals your way.
5. Financial management – in order to execute your vision in step two, you need to focus on the finances too. Forecast, budget, and invest to ensure the long-term sustainability and growth of your business.