Article written by Jannie Rossouw, Head: Sanlam Business Market
“In the business world, the rear-view mirror is always clearer than the windshield.” Warren Buffett
One’s natural inclination is not to put enough effort into keeping an updated list of events or results, and outputs in respect of one’s business. We remember negative events more easily.
I want to suggest that you make a point of regularly writing down and acknowledging the successes you achieve in your business.
Think of the following examples:
- Our year-on-year profit growth has been 20% (our target was 12%)
- Our staff turnover was 5% for the previous financial period
- We opened 5 new branches
- We were able to grow our market share by 15%
In order to obtain a balanced perspective on our businesses, we also have to write down the disappointments or failures. James Joyce (Irish novelist and poet) on occasion said: “Errors are the portals to discovery.”
Think of the following examples:
- We lost a key individual to the competition
- Our bad debt is 14% higher than last year
- We were unable to obtain the capital required to finance one of our key projects
- We did not achieve our 20% turnover target
Over the years I have seen that, if you first list the successes and then the disappointments, the list of successes is usually longer than the disappointments. If one’s focus is first on the negative outcomes, they dominate one’s thoughts and this makes it more difficult to list the successes thereafter.
The next step is to identify the “learning experiences” out of the successes and disappointments you just listed.
These are a few interpretations of the examples listed above:
- We did not achieve our 20% turnover target – learning experience: We have to make sure that the assumptions we use to do financial modelling, are well thought out.
- We lost a key individual to the competition – learning experience: We have to know who our key staff members are. We also have to ensure that they have sufficient reason to stay with our business.
- Our bad debt is 14% higher than last year – learning experience: A credit analysis should be done for all new clients that apply for credit terms.
It is one thing to identify the learning experience, but quite another to put it into practice in the business. Here are a few suggestions to consider:
- Update the learning experiences in the written business strategy document (make it visible).
- Identify the business area where the learning experience applies and allocate a responsible person to ensure that the implication of the learning experience is taken into account in all further decision-making.
- Make the monitoring of the implications part of the feedback process where the implementation of the business strategy is updated.
Although we cannot turn back time, we can learn from events in the past in order to bring about a better future.
To support business owners with the important task of business planning, Sanlam gives you free access to the book Your Annual Business Game Plan for Success, which provides an easy and straight forward framework needed to draft a well-crafted game plan that will create the positive change and growth necessary for business success
Go to www.sanlamgameplan.co.za to download your free copy.