The Problem-Solving Mistake That's Costing Your Business Money
I spend a lot of time helping people solve problems. In fact, I don't really consider myself a finance-guy. I'm a problem solver who just happens to focus on profit and cash flow. As a problem solver, there's a danger that is always lurking under the surface. And this hidden danger can actually turn your solutions into bigger problems. When we're faced with a problem in our business, we immediately jump into solutions mode. Money is tight- let's make more money. Staff are overworked- hire more staff. Leads aren't coming in- increase ad spend. At first glance, these all seem like good solutions, right? Here's the problem- they may be good solutions, but they might not be the right solutions.
Solutions like these are often a product of what's called "Solution First Problem-Solving." This essentially means we've chosen a solution before taking any time to figure out how to fix the problem. For example, tight money can be the symptom of a greater problem. While more revenue might solve it, there's a chance it makes the problem bigger (or just keeps you the same rut). What if there is a better answer out there? Maybe operations are moving too slowly, so improving production will reduce cash flow strain. Or it's possible that product margins need to be adjusted, or one of your business locations is eating the cash of the more profitable storefronts. Jumping in and focusing only on increasing revenue would have robbed you of the ability to solve the actual problem. The best way to combat solutions first problem-solving is to have a brainstorming session. Draft a list of 5-10 ideas for how you can fix the problem. Bring in some team members and outside support, like a coach, to help you unpack them. Then, choose the best solution. And yes, it's possible that raising revenue was the right answer. That's okay! You now can move forward with confidence that you are taking the best course of action.
To solving the right problems,
Craig Profit Coach (and problem-solver) P.S. I'd love to help you solve problems in your business that will drastically help your profitability. Schedule a free coaching call now.