“Ready, Fire, Aim” You should never hear that sequence, unless someone is reading a script from a war movie with a major typo.
Getting things in the right order is important, in fact, it is often crucial to the success in a business. That being said, sometimes there is flexibility, it might not come down to individual tasks always having to go in a specific sequence, so much as certain items needing to be lumped together in segments. The penalty for failing to do things right initially may not always be readily apparent. Sometimes it is a ticking time bomb that goes off much later.
In my professional experience, the two major areas where companies do “Ready, Aim, Fire” is related to IT and accounting. Coincidentally, these two things are usually the easiest to outsource, if you are willing to adapt to the right rules. So, there really is no valid excuse to not having these two functions operating well. In many instances, it comes down to being penny wise and pound foolish, we’ll highlight some examples at the end of this post.
Implementing good systems
Establishing good systems does not have to be the top priority of a new business, but by the time you question what the system is, or what it should be, it’s probably time to start establishing them. There are many pitfalls that arise without good systems, including:
- Inconsistency in products / service
- Lack of reliable and useful information, which leads to people deciding to use their own “facts”
- Confusion among employees
That’s the way it’s always been done…
Notice that the last section was about “good” systems, because not all systems are great. Many established companies have had systems in place, of which some may be outdated, or in some cases, were already outdated when they were initially established. The systems in companies that get reviewed usually revolve around operations, since it is much more visible. Back office functions, especially in accounting, are like a black box, and rarely get scrutiny.
The challenge with evaluating systems, is that it infringes on people’s tasks, which can be viewed as a threat to their job. Realistically, it can be an attack on that specific job, at least how it is presently being executed. So, in assessing the systems, you have to be aware that you are dealing with employees that may be operating with an agenda (protecting their current role) which can be at odds with advancing the company. Since many business owners lack an accounting background, it is usually the one function that is left untouched.
Real life examples:
- Taxes / Reporting – For one business owner, one business was making money and the profits were used to support another related business that was always experiencing obstacles. For the struggling entity, the books and records were never kept in the best order, with basic items such as bank reconciliations not being done, or being completed by making “adjusting entries”. As we have discussed before, this is a major problem. Since the business that was in the red did not owe any income taxes, the tax returns were ignored for several years. Later on, when it was decided to catch up on this, there had been turnover with accounting personnel, and certain key records were either nowhere to be found, or very difficult to hunt down. The extra costs in professional fees easily outweighed the “savings” on not spending extra on competent personnel to get it right the first time.
- Pointless paper pushing – A client that was moving facilities after a prior move within the last 4 years, had 50 filing cabinets of customer records (mostly credit applications). The personnel felt it was important to follow the procedure that had been in place for quite some time. With a very small amount of effort, we were able to ascertain how long this procedure had been in place. We went through the first 2 drawers (out of 200), we figured a 1 percent sample was good enough. Virtually every folder was in mint condition, meaning it had never been touched. We stumbled upon one folder where the most recent date was from 1988 (that was the year of the Challenger disaster, Reagan was president – this was well over 20 years later). The accounts receivable were a mess, there were lots of missed collection opportunities, but you have to admit, their paper records that never saw the light of day were nicely labeled in crisp manila folders.
- Franchise Operation – A franchise concept lacked consistent controls and processes upon conception, allowing for new franchisees to come on board without all having to follow the same set of rules. As you can imagine, trying to “right the ship” and get everyone to march in step is much harder to do after they have been allowed to do as they please. This caused a lot of extra time and effort spent on implementing the correct systems and fighting with existing partners. If the systems were in place initially, all that time and effort spent on coordination could have been used to grow the business sooner and enhance everyone involved.