The Australian Small Business Blog

Wednesday, April 25, 2018

Removing the Biggest Bottleneck in Your Business

by Dr Greg Chapman

A bottleneck is where a logjam occurs, allowing only a trickle to pass through the neck to the other side. Bottlenecks result in missed opportunities and impose costs due to underutilised capacity. While this is well known, little is done about the biggest bottleneck of them all.

In some organisations, the bottleneck may be in accounts, who delay issuing invoices because they haven’t been provided all the documentation from sales creating a cashflow problem. Alternatively a supplier may have let you down resulting in operations staff twiddling their thumbs. Or in operations, problems with meeting quality specifications leaving disgruntled customers waiting.

All of these bottlenecks create real costs for a business, but there can be an even bigger bottleneck that can paralyse a business. It’s when the owner doesn’t make decisions. Delaying for more data, too busy with the day-to-day and the distraction of the latest bright shiny object are examples of this.

These are just ways of avoiding the tough decisions. Hoping things will turn out ok by themselves. (Hope is not a strategy.) Perhaps there is a fear of the unknown, and a retreat to the comfort zone. Unfortunately, over time the comfort zone shrinks until it becomes a straight jacket.

When the owner doesn’t take decisions, the business suffers. Problems in the business don’t get addressed and opportunities are missed. Perhaps there is an opportunity to expand in a new location, but there is a cost, and a risk that it will be a poor return on investment. How does the owner decide that the risk is worth taking? While they ponder and suffer analysis paralysis, a competitor makes the move and prospers. Fortune does favour the brave.

The competitor probably had the same concerns, but just decides they will put in the effort to make it work.

It usually comes down to having a clear vision for your business. Knowing what you want, and having a plan to get it. While not eliminating indecision, this does reduce the difficulty. Does the decision advance the plan? Is it a distraction?

There still need to be an understanding of the risks. Risk can never entirely be eliminated, except by doing nothing, and even that has risks.

Years ago I worked in an operational environment where the cost of shutdowns was $100k’s per day. We couldn’t predict every uncertainty, but we had contingency plans. They never covered everything, but that planning meant that in the event of the unexpected, we were ready to act. A decision to think about a problem even for one day was a decision to spend $100k’s.

It was where I learnt almost any decision was better than no decision. I also learnt if I couldn’t make the decision, there was always someone I could ask. I mightn’t have done what they said, but having access to objective advice was crucial. No one knows it all.

So to avoid becoming the bottleneck:
1. Have a vision
2. Have a plan
3. Have a source of objective advice

Avoiding a decision is a decision to continue business as usual and to leave your competitors to make the planning decisions for you.

May You Business Be - As You Plan It!

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Dr Greg Chapman is the Director of Empower Business Solutions and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success and Price: How You Can Charge More Without Losing Sales.

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