Flying Blind Leads to Disasters

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Solidarity-929400_1920Entrepreneurs are sometimes lulled into winging it, managing by the seat of their pants, and flying blind. They forget about staying on top of the “performance numbers” that are important indicators of their business’s health.  They don’t look for feedback that can give them a clear picture of what’s going right and what’s beginning to go wrong.

Now some business owners are simply undisciplined or lazy, and can’t be bothered with the details.  In those cases, they deserve to suffer the consequences.

Most often it’s not because they don’t want to check the vital signs. It’s because they can’t find them, or don’t know what information they should be reviewing.  The information is not always easy to get or understand.

What reports should you have?  I would recommend just a few to start:

  • A morning report showing daily cash balance, daily sales, receivables balances, and payables balances.
  • A weekly list of customer orders not yet invoiced or delivered.
  • A monthly balance sheet, income statement, and cash flow statement.
  • Monthly sales reports by customer and by product.
  • Any other numbers you think are vital to your company’s success.

Two other reports I would recommend are the “5-15 report” and the “Go For Broke” report.

The “5-15 report” is so named because it requires no more than 15 minutes to write or five minutes to read.  It should be submitted every Friday by most employees of the company.

The first part of the report is a simple description of what was done during the week.  Most employees find that, when they have to describe their work week after week, their ability to describe what’s going on becomes refined and more detailed.

If they do not become more adept at defining their work, if their reports become boring and repetitive, that should come through as a danger signal.  Your employee requires a, a job needs to be more challenging, or both.

The second part of the “5-15 report” is a blunt description of the employees’ morale, and the morale they see in their department.

The last part requires everyone to present one idea that will improve their job, department, or the company—one idea a week, 52 ideas a year.  An unspoken rule is that all ideas, suggestions, and problems presented in the reports are acted upon within one week.  A longer delay would be ineffective and demoralizing.

One month a year, suspend the “5-15 report” and make way for the “Go For Broke” report.  This report is an attempt by every person in the company to list everything in his or her department, or anywhere else in the company, that the employee believes is broken and needs fixing, including interactions between employees.  It is a company-wide inventory of what needs to be noticed, changed, improved, or checked.  The writers of the longest, most original, most humorous, and the best thought out “Go For Broke” reports get awards.

In most cases, the things needing repair are fixed by the person identifying the problem.  I have not seen or heard about anything that improves a company as thoroughly as these reports.