Recently my family went to see Frozen 2. There was a part in the movie where Anna and Olaf were stuck in a cave with no way out. Of course, for a Disney movie, this is an opportunity to break out into song. The premise of the song was when you don’t know what to do, you just do “The Next Right Thing”. This is great advice for many decisions, but I thought it was quite applicable to small businesses.
Sometimes in business, it can be much more challenging to know the next right thing to do. Here are some ideas to help.
We all have options to choose from to make certain decisions. We could choose to hire someone, spend on marketing, invest in equipment, or cut expenses. We could spend more time and energy on business development. Sometimes we are not even aware of our options. Do you remember in 2002 when Donald Rumsfeld, the US Secretary of Defense, explained the difference in “Known Unknowns” and “Unknown Unknowns”? We all have “Unknown Unknowns” that we are not seeing. Rumsfeld wrote in his 2011 memoir that “they are gaps in our knowledge, but gaps that we don’t know exist”.
What do we do when we don’t know something? In this case, I would advise getting some help. For example, if you are having trouble understanding your financial situation and how this is affecting your future cash flow, then get some help. Maybe there is something there you haven’t seen before. We always start by putting together a financial model that shows different options. We can use this to perform scenarios that make it much more clear of the options, possibilities, and risks.
We are getting to the time of year when many of us start putting together goals for the next year. There is plenty of research that says we need to have a goal. We need a target. We need a way to know that we are heading in the right direction. What is your mission? Why are you in business, and how are you helping your customers? What are the values of the organization, and how can you use these to reach your goal.
Recently, I was working on the mission statement for our firm to help us focus on the key customers and services we offer.
We are a financial intelligence firm that helps small growing organizations better understand their financial position and trends so they can gain visibility to make informed decisions and maximize growth.
What if we were aware of our options and were clear on our mission and our goals, but we never took action. Recently in a marketing meeting with CycleWerx Marketing, we discussed the marketing calendar for the next 2 quarters. The challenge was picking where to start. We just have to start and take action and start assessing what we are doing. Since working with them, all my contacts and marketing have been moved to Hubspot which has been a great improvement.
What if you want to assess a financial decision? Earlier this week in reviewing a financial model, it was clear that expenses had stayed in line with budget and recent forecasts, but the revenue targets were falling short. There was not enough revenue for the personnel costs. How can we be sure to keep this in line next year? How can we assess sooner? Should we ask ourselves hard questions before hiring? What is the risk? A good forecast model that is reviewed regularly can provide you the assessment so you know how to adjust for future actions.
I don’t write this as if it is easy. We know sometimes it is two steps forward and one step back. Just doing the next right thing might be a nice catchy song, but it can be more difficult if you don’t have guidance, knowledge, and insights. Once you get some guidance, then be clear on where you want to go, and take action with frequent assessments.