Thursday, April 26, 2012

Business Finance Problems and Solutions

One of the most important duties of a business owner is to solve problems. Some of these obstacles will be more critical than others, and prioritizing problems properly might be as important as formulating business solutions. Identifying problem areas accurately in the first place can also make the entire process more productive. No matter how successfully problems are identified and prioritized, the final test will require that they be solved in a timely and effective manner. But problem-finding, prioritizing and solving each have an important role in reducing the potential negative impact of business finance problems.

Of course some business owners might choose to employ the "putting out fires" strategy. With this approach there will not be a perceived need to identify and prioritize problems. Instead there will be a reactive action taken to each problem (the "fire") as it appears on the scene. Because there are fewer hands to do everything in smaller businesses, this haphazard method of tackling problems tends to be seen more regularly in a small business environment. However, as larger companies continue to go through one downsizing round after another, this practice is gradually creeping into the forefront in more business situations because of fewer and fewer employees to handle everything. While this might represent problem-solving in its least favorable light, it might also turn out to be what the majority of companies are forced to do by default.

Just as each manager probably has a different tolerance for risk, there are many different ways to approach problems. Ultimately it can be viewed as a test of how to manage resources that include both time and money. Creativity can play an important role because the old solutions are frequently not the best solutions. Creative approaches to problem solving can also help to minimize the impact of time and cost constraints. Business creativity can be especially helpful in rapidly-changing circumstances which produce new problems requiring new solutions.

Finding the problem areas is probably an under-rated management function. This particular task takes on a new level of importance when the external and internal environments are both changing in ways that are not familiar to even the most experienced managers. The bad news is that is precisely the chaotic kind of financial and economic circumstances which seem to be impacting most industries currently. Does that mean that many problems are now unsolvable because of what might appear to be unforeseen changes?

The most candid answer is a qualified "Probably not", although it should be acknowledged that a "moving target" is likely to be more difficult to hit than a stationary one. Companies will increasingly need to consider a wider range of alternative problem-solving strategies as the challenges become more complex and unpredictable. Even the appearance of unpredictability should not dissuade managers and business owners from continually searching for a better solution. Peter Drucker once observed that "The best way to predict the future is to plan it" because he felt that effective business planning could overcome even the unknown elements that will impact businesses in the future. With this mindset, the management goal would change from "putting out fires" to anticipating the fires and avoiding the fires.

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