Success as a birthright – Or is it?
You have spent months, if not years to arrive at this moment. A moment when vision is transformed into reality. And there’s nothing to stop this dream taking its rightful place as a history changing innovation. Although the journey has been arduous, persistence and single-minded commitment has won the day.
Nothing can stand in the way of your success. Your success is pre-ordained and almost a birthright.
Well, I hate to burst your bubble.
Hundreds of businesses are formed daily. And yet they fail. What makes yours fail proof?
The Reality of Business Survival
Starting a business on a positive note is a good thing. Thinking it is the end of the journey is not.
Here are some grim statistics. Only 2 out 10 businesses survive past their first year. For startups, it is twice as bad with failure rates doubling.
It doesn’t get sunnier even if you get past the first year. The statistics show that failures continue until about the fifth year.
At this rate, there would be as many post mortem reports as there are pitch decks and business proposals.
Why Do Businesses Fail?
A lot of businesses fail because of factors beyond the control of its owners.
Think undercapitalisation for one – products or service too novel for the market to provide a reference point in projecting the financial needs of the business.
Or it could also be a case of being too early for the market. Think Friendster, WebTV and Iomega Zip Drive. The old saying in startups of “being early is the same as being wrong ” proves true time after time.
Where things are beyond control, the consequences are more acceptable as compared to when there is control.
But there are lots of business failures occurring despite owners having control of the causes and circumstances.
Internal malfeasance like corruption and dishonesty, breaches of authority, liabilities from unregulated interactions with external parties. All of these factors places organisations at risk. If left unregulated and unattended it will lead to a failure of the enterprise.
And the guilt would be deeper as these are preventable.
The Problem Finding Mindset
Despite illusions of grandeur and the elation from the launch of a business, organisations must quickly expand the business focus to include problem finding.
Although risk management issues like these seem rudimentary, it requires a mindset to recognise the need to have safeguards in place.
What is required is a problem finding mindset and it is built around the following: –
- A realisation that every commercial enterprise is not without problems – the only difference is the extent of it.
- Not all problems are caused – a lot of them stems from organisational weakness, competency gaps and monitoring failures.
- The mindset is not about expecting to find a problem but rather developing the vigilance of seeking out the potential of a problem.
Problem finding is not about going around with a magnifying glass and probing every department and reviewing every transaction before it goes through – that would add to risk rather than address it. It involves establishing risk management structures and processes that focuses on prevention or at the very least, early warning.
Benefiting From Problem Finding
With the realisation that every business faces the risk of failures, the expectation of problems as an inevitability should lead to steps that should be taken to address them.
The initial structure would be preventive in nature – enterprise risk management, internal limits of authority, policies on external engagements, whistleblowing and insurance are common infrastructures that seeks to prevent problems from arising or at least providing early warning before the problem develops beyond remedy.
Where problems cannot be prevented, active and prompt remedial management of risk is the second line of defence for a comprehensive risk management infrastructure.
Adopting a problem finding mindset, more so amidst the elation of a new business or the feel good vibes of a performing organisation is not always the most natural thing to do. Folks generally don’t go looking for trouble – but that’s exactly what you must do to keep vigilant.
You cannot safeguard your business without knowing its problems. And you can’t know its problems without actively seeking it out.
It is worth remembering that behind every victory is a great defence. Don’t be the guy who didn’t check the weather forecast, lest you get soaked at the parade.
To gain further insights into how to adopt a problem finding mindset as part of an essential component to an effective risk management structure, kindly contact us at FTCC.
© FT CORPORATE CONSULTANCY 2017
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