An Apple a Day For Your Business
“I know it when I see it,” said Potter Stewart in the court case Jacobellis v. Ohio speaking of obscenity. This is a bunch of bunk. Seeing doesn’t mean seeing. After all, the saying “If it was a snake it would have bitten you,” did not spring from nowhere. In that vein, issues relating to problems are complex. It takes beyond viewing them to be seen. If we dive in, we can learn some valuable ways of looking at them so that they can be diagnosed. But what is a problem?
But First – My Definition of Problem
Lawyers are nerds about definitions. In our defense, it leads to clearer thinking. In this case it helps us eat the elephant – one bite at a time. A problem is an obstacle or the flip side of your goals. Without goals, you have no problems. Take a beach bum for example. A beach bum is not worried about anything. They may want to go and get a cheeseburger at night. They won’t be worried about the consequences because they have no goals. With unclear goals, you have fewer problems. If you are an ambitious business owner, you will want to go places by setting goals. Prevention is the key to direction and solving those problems your goals bring. If you can learn to steer around your problems, you will stay on course.
Why Knowing Goals Opens the Door to Preventing Problems
Once you set your goals, you have defined your potential stable of problems. This is one of the foundations for why we have a fighting chance for figuring out how to steer around problems—if we know the goals, just look at the flip side. Sure, we have common denominator goals:
- Stay alive
- Keep the company afloat
- Make payroll
- Keep everyone from replying all to company-wide emails
These goals set a background of potential problems for every business. I love working with a business right after they have a yearly or quarterly planning session – such as a Scaling Up Garibay meeting or an Entrepreneur Operating System. Whenever I start working with a business, I size up their goals and then keep pushing them to become more specific. Knowing your goals opens the door to scoping out the problems and doing something about it; hopefully preventing them.
Knowing What to Do
Knowing about the types of problems helps us decide what to do so we can:
- Know whether it is a low or high priority. This is a factor of two types of problems:
- Severity of the problem – High or Low
- Whether or not the problem is likely/not likely
- Determine what we can do about it: Prevent or Prepare. This again is one of two types of problems:
- Fixable/Not Fixable.
Let’s Unpack Those Four Variables Starting with Severity
Not all problems are created equal in degree. Some are worse than others. When meeting with clients, I mention what I call the Problem-Hassle Continuum. Their issue is either a problem or a hassle. A “disaster” is likely more severe than a “screw up,” but the exact meaning of these two terms in relation to business problems remains dependent on a person’s intent. A hot check or a small unpaid Accounts Receivable is a lot less serious than bankruptcy or liquidation. When thinking about problems, we need to keep severity in context. Some are gnats – others are a pack of vampire bats! This affects how we prioritize dealing with them.
So Goes the Likelihood of Them Happening
We are all going to die, right? Morbid, yes, but follow me. A healthy, in shape 35-year-old business owner is a lot less likely to die tomorrow than an overweight, chain smoking 85-year-old. Of course, I’m using the extremes to illustrate a point. Some people, or situations, are more likely to be at risk than others. There is a whole industry based around this concept: insurance. Insurance companies set rates based on the likelihood of a problem occurring.
Here’s an example: I live in northwest Oklahoma. I have a bunch of clients in the oilfield business and that industry depends a lot on the price of oil. When oil was at $120 a barrel a few years ago, I knew it was headed for a crash. I told our clients to get ready, to tighten their accounts receivable, and to save cash. So, with likelihood a key variable being considered, they were prepared when prices dropped 75% to below $30 a barrel.
Then There is Whether You Can Prevent the Problem at All
Some problems you can prevent. Having an employee contract in place when you need it or having a succession plan if something happens to top leadership are just a couple of examples. Other problems you can’t do anything about; like the economy crashing or another person running into one of your vehicles. When thinking about problems, this distinction helps size up what to do about them. Sometimes all you can do is prepare for them. If you do that, particularly for the more likely ones, you are a step ahead of the competition and still on track for success.
Finally, There is the Fixable Variable – If It Happens, Can You Do Anything About It
If there is an easy fix to a problem, it may lower the priority of dealing with it. For instance, an unpaid, but collectible, receivable is a fixable problem. It is just a temporary dent in your cash conversion cycle. Alternatively—irretrievably losing your business data can be a major catastrophe and can be considered a higher priority.
The Bottom Line is This
Severity, likelihood, preventability, and fixability all factor into how we manage potential problems. We do this every day in our lives; we just don’t think about it. I have some charts further illustrating these distinctions up on the Forms/Graphics tab at www.artofpreventingstupid.com if you’d like to explore this further.
Next Week – I’m Back to Help You Build a Foundation to Get Ahead of Your Problems
We’re going to dive into where problems come from and how they are really symptoms of deeper problems in your business systems. Signing off for now – Davis out!
The content on this page has been reviewed and approved by Matthew Davis: CEO of Davis Business Law.