Episode 9 8th Key Factor - Business Disciplines
The benefits of maintaining good business disciplines can be seen in the positive performance results of your business. For instance, a positive business decision could be; not to deal with suspect or dodgy suppliers whose products may cause problems in the future.
In tough times, cheaper goods and services always look good at first. The cost of defective products, loss of reputation, fixing problems later on, soon make the initial purchasing decision and lack of due diligence awfully expensive.
Unfortunately, when business discipline is mentioned, it is all too often treated in an emotional and negative manner based on the upfront cost, that it will cost sales, or a fear of missing out on a great deal. What is rarely mentioned in a calm and measured manner, are the dollars and reputation lost due to an undisciplined act.
In the coming recession, the first effect of previous poor business disciplines will soon be seen in bad debt write-offs, or when your business is hit by claims for compensation due to negligence of product or service delivery. Many of these losses may have been avoided with a focus on a disciplined approach when buying the goods or using service providers.
Moving forward, when the recession really has a grip on the business environment, business disciplines will play an important part on whether your business is forced to close, survives, or grows into a better business. Good business discipline is based on both historical business norms plus proper due diligence in the current business environment. In the future, a greater degree of risk or a reduction of anticipated profits may have to be factored into your decision making in order to survive.
In a recession period unfortunately, good business disciplines are often marginalised or ignored in the false hope that will assist the survival of the business. The outcome is usually the opposite. The areas of greater risk where business disciplines should not be forgone or marginalised therefore are:
dealing with risky, bad paying, or new customers;
ignoring the red flags of problematic behaviour with new or existing customers;
allowing debt owed to drift out;
failing to confront problems with debt owed to suppliers and financiers;
dealing with less reputable suppliers;
employing cheaper or less professional employees;
ignoring employee observations and suggestion on dealing with customers and suppliers;
picking up the telephone and talking with customers and suppliers about problems;
taking over a competitor or moving into a different marketplace, etc.
Strong business disciplines are always important, but never more so than in a recession. It is surprising when your business actually adheres to strong disciplines how often you see the benefits. In addition, a non-monetary benefit of good business disciplines frequently ignored is peace of mind. It is really difficult to concentrate on surviving in a recession when your mind is cluttered by problems caused by bad decisions, or by poor business disciplines.
This concludes the eighth key factor; business disciplines. After a short break we will review the next key factor, your business model.Listen To Audio Version