It’s A System . . . (June 2008)

It’s A System . . .

A business is a system. Much like a mechanical system or the human body, if one part is not working it puts pressure on all the others. If you think about your own business this way, I’ll bet you’ll find that it’s true.

As I tend to get calls from businesses that are struggling, I probably see this more than most. The breakdown of a business system shows up in the numbers, but finances are a reflection of the business functioning. Show me a business that functions smoothly and efficiently, and it will likely be profitable. Show me one that struggles with day to day issues and I’ll bet the financial performance will reflect that as well.

While each business is different, most have sales (closing the deal), marketing (getting the word out), customer service (resolving issues or providing support), “product” (those responsible for actually producing a product or delivering a service), accounting/finance (adding up the numbers at its very simplest), information technology (keeping us all connected) and management & administrative (overseeing all of the other functions). Your business might also have R&D (research & development) or some other function(s).

Now, imagine if one of the areas just stopped. If no one delivered a product or service, revenue would dry up pretty quickly. If accounting didn’t send out bills and take payments, then the bank account would soon empty. If the sales department doesn’t close new business, the top-line will drop. Even if building services quits emptying the waste baskets and cleaning the office, the place would soon become a mess and it would impact the entire organization.

The examples stated above are obviously extreme; usually an entire department doesn’t just stop working. However, it’s not so uncommon for departments to be operating at less than full capacity and maybe not even meeting minimum job requirements. When this happens, it puts pressure on every part of the organization.

When the sales department isn’t “making its numbers”, profits drop. This may result in a cutback on resources and make it harder for those delivering products or services to do their jobs. Accounting may stretch payables. This results in calls from unhappy vendors. This takes time and further affects the organizations ability to “get the job done”.

Maybe those delivering the product or service don’t do a good job; as a result, sales suffer. Customers may withhold payment. There will be more complaint calls. Management will step in to deal with the issue of the day rather than planning the future.

The problem can start anywhere. When you see it, it’s not so much about where it started as it is about getting a handle on it and stopping it. That is clearly easier said than done. If you’re fortunate enough to see it starting, nip it in the bud. It doesn’t take long before it will infect the entire organization! If your business is struggling, think of it as a system . . . it might provide a new perspective!

If your business could benefit from fractional CFO services, I would welcome the chance to speak with you. Please give me a call at (314) 863-6637 or send an email to

your cash is flowing. know where.

Copyright @ 2008 Homza Consulting, Inc.

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