Change is inevitable. It can easily take anyone out of the comfort zone and into the fire. However, it doesn’t have to be that way. Change can be calculated and it can certainly have a positive impact on a business. Every business can improve if it takes the right steps to make a positive change.
Step 1: Take a step back
Most business owners are stuck progressing through the normal everyday routine. This usually includes managing operations to ensure that all of the work is being completed on time. However, is that where all the focus should be? This is a classic case of a business owner working “in” the business and not “on” the business. It is very difficult, but as a business owner, you need to take time to step away from the noise of the business and take a look at the bigger picture. You can easily try to argue that you know exactly what is happening in your business because you are working in it every day, but you can be surprised about what you overlook when you do not look at the business as a whole. Set aside a time, at least once a month, to do this.
Step 2: Analyze
The most basic tool that a business owner can use to analyze the financial state of the business, is the financial statements. When reading through the financial statements, each line should make natural sense as to what has been happening with the business. If something seems odd, that is an indication that you may want to dig deeper into what happened. It may be that whatever is causing the numbers to look odd to you is perfectly reasonable once you discover the real cause. You just need to get into the habit of looking. You can also supplement your analysis of the financial statements with other tools such as dashboards, forecasts, budget comparisons and much more. This takes practice. You will not become a master of this analysis overnight, but you will become better throughout the process.
Step 3: Adjust
The best part about using various financial tools in your analysis is that it makes decision making easier. It provides you with proof and reasoning that something needs to be adjusted in your business. Usually, business owners do not have the support to make the decision so it never gets made. However, now you can feel confident because you have educated yourself on the situation. The only thing left is to decide what decision to make. There could be multiple options to choose from. The best way to decide is to look at the pros and cons of each option. This will help you determine what the choice actually means to and how it affects your business.
This is an ongoing process. Businesses and their surroundings are ever changing. The process will start to come more natural to you as you continue to use it. Once you break it down, change really isn’t all that scary, now is it?