Weekly Business Idea

July 21, 2017 – What’s Wrong with What You Know?

Posted on | July 21, 2017 | No Comments

Main Idea:

Have you ever been real sure of something and then find out that you were completely wrong?  Has a system changed in your business and you are not aware of it?  Do you read all of the amendments to contracts?  Could something significant change and you not be aware of it?

Expansion of the Idea:

Yesterday I was finishing the trust return for a client who died a year ago.  I called the trustee to discuss the return.  During the course of the call, I realized that he had made distributions to some heirs that he shouldn’t have.  The problem was that the deceased had explained what was supposed to happen when she died but then she amended the trust.  She didn’t explain the full impact of the change in the trust.  As a result, he had the wrong understanding of her wishes.

I completely understand how it happened.  This type of thing happens all the time with estates.  It seems like there are almost always surprises in the administration of a deceased family member’s estate.  The same is true with our businesses.  It is frequently worse because we know them so well.  When we know something, we don’t double check it.  What we think we know can get us in a lot of trouble.

How does this show up in our businesses?

  • A customer calls with a problem.  We tell them that they could not have had that problem because of our procedures.  Then we find out that the system changed because of some event or an employee just didn’t understand why we were doing something.
  • A line of credit that normally renews every year was changed to 6 months and you didn’t realize it.
  • A long-time employee all of a sudden quits because they are bored.
  • A long-term customer decides to go to a competitor because they have stayed in touch with them.
  • You discover that a trusted employee just stole $100,000 from your firm and did not pay the insurance premium for employee dishonesty.
  • You think you have insurance for cyber liability but you dropped that rider because of rates.
  • A large customer has always paid until they get hit with employee embezzlement.
  • Your computer data is backed up daily until there was an update and the backup has been paused for 6 months.

We can come up with a lot of different scenarios where we can have problems.  To minimize the damages, we must set up systems to periodically check all significant issues that could threaten our survival.  We need to read contracts.  We need to take time to talk to our employees.  We should visit customers and make sure that we are providing value.  We should make sure that we have systems to maximize our business and minimize risk.  We also should inspect those systems.  We should make sure we are getting the right reports and key metrics to make sure something is not going off course.

All of this starts with us admitting that we don’t always know what we think we know.  A perpetual state of curiosity is a good thing to have.

Places to Start:

  1. Do you do an annual risk evaluation assessment?
  2. Do you have a calendar for management duties that only need to be done 2 or 3 times a year?
  3. Have you taken a hard look at your systems to make sure that they are operating the way they were supposed to?
  4. Have you intentionally spent some time with employees to make sure that you are serving them well?
  5. Have you intentionally spent some time with customers to make sure that you are serving them well?

Comments

Leave a Reply





  • About

    These weekly ideas are brought to you by FitzGerald & FitzGerald P.C. For more information about how to use these ideas with your small business contact Tim FitzGerald at trfitz@fitz-net.com.