Matters Column

Take care of all the ‘organs’ of a business so it doesn’t die

May 10, 2013
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As a person ages, various organs begin to show signs of wear and tear. When an essential organ fails, the whole system closes down and the person may die.

That is just what happens when certain functions of a business fail.

I have always marveled at the lack of understanding relative to the interdependence of functions within an organization. I think there are very few people who do not understand that, no matter how strong one organ is — or for that matter, all but one organ, you cannot survive. If you have a bad liver, the health of all your other organs will not deter your imminent demise.

A simple approach to preventing a business from failing is to look at each function and see its potential to kill the organization.

Sales and marketing is the starting point. You might assume that all businesses are aware that sales effort is essential to an organization. Not necessarily so. Some organizations believe their products or services are so superior that marketing and sales efforts are not needed. 

Rarely does that happen. Sales is to a business what food is to a human. You must have sales to nourish the other functions of the business. Good marketing and sometimes just good old-fashioned, bloody knuckle, door-to-door cold calling are methods of generating business — whatever it takes. A starving human will go to any length to attain nourishment. Businesses are much the same. 

The accounting department, in my humble CPA's analysis, should be the nerve center of the business — in other words, the brain. The brain is the processor and disperser of information to the other organs of the body so they can work together.

A healthy accounting department should provide the operating pattern for the entity. Knowing your gross margins, balance sheet ratios, net profit, etc., provides the data for the effective use of assets in carrying out the function of the profit-and-loss statement. Without quality accounting, the other functions of the business become disjointed and ineffective.

Production is the muscle of the business. Good manufacturing is like good food. For a human, you are what you eat. In business, you are what you make. Without a quality product moving through the organization, the rest of the entity eventually will become sick. 

Sales cannot overcome a steady diet of junk products — just like your body rejects a steady diet of junk food. Junk food gives your body things it does not need, like sugar, while not delivering the combination of quality nutrients it needs for healthy function. Junk products deliver cash flow, customer and profitability problems. Good products deliver cash, profits and happy customers. Feed your company well.

An amazing discovery a few years ago was the connection between dental problems and heart problems. Who’d have thunk it? Brushing your teeth actually may prevent heart disease! Similarly, who would think that the office receptionist might be killing your business? 

Consider this: Who is the first person a new customer meets when they visit your business? The receptionist. It is hard to make a second good first impression. The person at the front desk is often one of the most overlooked people in the organization. Like brushing your teeth could spare you a heart attack, making sure your front-line staff people understand how important their jobs are may make your business healthier.

One of the benefits of aging is that you get to meet a lot of new people. Unfortunately, they are the legions of medical specialists who keep you alive. 

The same thing is true when it comes to your business and its outside consultants, and a common concept applies. If you have leprosy, a heart specialist is not going to be of much help. A communicable disease specialist and a cardiologist are both doctors, but neither will be of much help to you outside their specialty. 

Business consultants are much the same. Obtain legal advice from lawyers, tax advice from CPA's and investment advice from financial planners. Any of those specialties functioning in the others’ area of expertise is dangerous to the health of your company.

Years ago, I read an observation about horseracing. The writer commented on the phenomenal physique of the winning horse. Then he observed the wretched condition of the owner: fat, drunk and smoking a big cigar. The owner of the horse cared about the horse’s health more than his own.

Take care of yourself, as well as the business. Learn and apply good health principles to both. Remember: Like a body’s organs and a business’s departments, you and the business are interdependent. Neither is truly healthy if the other is not. 

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