Welcome Back Black Sheep! Today, I wanted to bring you a quick guide for all those go getters out there The Costs of Doing Business: Hidden Risks and Greed.
When it comes to a business’s financial success, there are two primary variable you need to keep track of: profits and costs. If you can retain control of these key variables, you can ensure that your business continues to operate successfully. However, there are other variables to consider too as ignoring them could lead your company to failure. These include hidden risks and greed.
When running a business, most business owners focus on external risks, e.g. changes in client expectations, new competitors entering the market, what’s other businesses in the sector are doing, etc. While these are all important and valuable pieces of knowledge for a business, many companies make the mistake of ignoring the hidden risks that can be just as damaging. These are often the internal risks and they are difficult to spot until it’s too late. Here are some of the common hidden risks you should know about as a business owner:
Lack of Communication and Integration
Lack of communication and integration between teams is the biggest organizational risk that many companies face. Sharing information is crucial as it makes your workforce more flexible, as they can then collaborate, cross-train, and acquire new perspectives on how the company works.
Prioritizing Rules/Guidelines Over Dialogue
Sadly, many companies make this mistake. They basically give strict guidelines to their employees about how to do their job safely without focusing on offering any opportunities for dialogue. This leads to company failure. Good businesses use guiding principles (instead of rules) to run the company and focus on providing opportunities for dialogue.
Information System Compromises
The information system network of a company is only as strong as the practices of all of its employees. Oftentimes, companies only think about protecting their valuable information from external attacks, from outside the organization. However, to ensure protection of private information, it is crucial that the employees of the firm understand the best practices for protecting it and the importance of following such practices.
Not Looking to the Future
Some businesses are often too busy keeping an eye on the current news and trends in their sector that they ignore the future of their company. When this happens, an organization becomes too myopic in their view of the marketplace, which is a huge risk. Looking to the future is a key component of being a responsive, agile organization.
Not taking enough risks is also a hidden, critical organizational risk. Risk is a crucial part of running a businessand if you wish to succeed in today’s competitive business environment, you have to take on some risk, otherwise you would get left behind. Simply continuing with business as usual and hiding from the changing marketplace is one of the worst ways a business can deal with change.
Greed is another variable that can lead your business to failure. When you are doing well as a business, you naturally want to do even better. However, sometimes your high expectations transform into outright greed. If such a scenario, your company may be in trouble. If you allow greed to start influencing your actions, it can wreak havoc on your business. It can do that in a number of ways. Some of the examples include the following:
Prioritizing Profits Instead of Improvement
Improving customer service should be the priority of every business. Unfortunately, factors such as greed sometimes lead a business to help themselves rather than their customers. In such cases, a company only looks for ways to charge its customers more instead of helping them out. This leads to a decline in business particularly when customers start to feel that the company doesn’t really care about them.
Making Bad Personnel Decisions
Businesses that only care about making money tend to ignore flaws in their employees as long as they are producing good monetary results. This is really bad for the organization as it will hurt morale and eventually lead to employees resigning.
Taking on More Clients Than the Business Can Effectively Manage
Greed may lead you to believe that more clients equals more money. However, this isn’t true. If a business stretches its staff too thin with workload, the customers won’t be happy with the services offered. Worse yet, word may leak out to other potential customers that the business is failing to produce quality work or meet deadlines.
Increased Risk of Losing Loyal Clients
When it becomes clear that a company only cares about earning profits, its risk of losing even the most loyal clients increases. Clients want to hire the services of a company that respects them and sees them more than just a dollar sign.
In conclusion, the costs of doing business include more than just monetary aspects. You should take steps to identify the hidden risks that may be lurking within your organization. The dangers of greed and hidden risks can be devastating, but the benefits of managing them in a timely manner are numerous. We hope you found this useful and learn along the way that running a business is not as easy it may seem! Till next time! – The Black Sheep