By Brett Crombie, Director, Straightedge Accounting
As I write, yet another wave of Covid is sweeping through the country and impacting businesses in all the ways we are now familiar with.
For the past two years business owners have become used to the constant uncertainty that the pandemic has caused. They have coped with the primary impact of sickness amongst staff, plus the secondary impact of things like reduced turnover, supply shortages and dramatic changes in inflation and interest rates.
This constant shifting of the business environment gives rise to a helpful way of thinking about business, as a tug between forces of chaos and forces of order.
All businesses have some things in common. They take resources such as money, assets, skills and work, and join these together toward producing a state of order for clients in the form of a product or service. Roading contractors for example combine construction skills, experience, specialist tools and work effort to produce orderly roads for each client. Put another way, all clients are ‘buying orderliness’ in some aspect of their lives, be it a new road or a free-flowing culvert.
Along this journey from resources to the final product or service, forces of chaos act to upset and distract the business, while forces of order serve to help the business.
Forces of chaos
Anything that increases uncertainty is a potential source of chaos. These may be external to the business or internally generated. Examples of external chaos include pandemics, global warfare, supply shortages or economic instability. Internally generated chaos could include planning blunders, scrappy bookkeeping or inconsistent work effort and quality.
Forces of order
By contrast, businesses also have stabilising forces, which act to repel the chaotic influences. Examples include consistent and high-quality work, written processes, clear communication, attentive bookkeeping and smart use of technology. Most forces of order are internally generated by the business owner, rather than being imposed on the business from the outside.
Applying these concepts to your business
Thinking of your business as a wrestling match between these opposing forces can help focus attention on aspects of business that are controllable, yet sometimes neglected.
A focus on strengthening the orderly aspects of your business will inevitably flow through to the final product or service. For example, businesses with orderly bookkeeping also tend to get their quotes and invoices out promptly, price jobs accurately and maximise tax deductions.
There is also a strong psychological component to having these things in order. It feels good and generates confidence. Importantly, the consistency and savings resulting from this bookkeeping orderliness all eventually flow through to producing consistency and quality for clients.
While there will always be many aspects of business that are simply imposed upon us, a focus on orderliness in those areas that can be controlled is always worthwhile, especially in uncertain business environments like the current one.