Are you curious to find out a secret?
It’s possible for businesses to be overwhelmed with customer demand.
Should this happen, the results might be catastrophic. In point of fact, quick expansion is one of the top three reasons why firms are unsuccessful. Why, because it causes tension in everything else related to your company. This covers your cash flow, the experience of your staff, the systems your company uses, your ability to lead, and your management skills.
Let’s take a look at how something like this might occur as well as what you can do to stop it from happening.
The rapid expansion of a business is stressful.
Your company is expanding, and you are working very hard to keep up with it. You realized a few weeks ago that you required more workers, but you were unable to find qualified individuals to support your expansion. You have now employed new staff, who will require many months of training before they can be brought up to speed. Because you’ve been so busy, it’s possible that you haven’t given much thought to your finances recently. Even while you are aware that cash flow is limited, you no longer have a clear understanding of just how limited it is. This is how the issue initially arises.
If you are too busy, you are well on your way to making a mistake that will cost you $10,000. When you have the right person at the wrong place at the right moment, this is known as a “perfect storm.” Then, in an effort to avoid being a burden to you, they make decision that have consequences. In most cases, a new employee is the one who lacks proper training. They have the best intentions of doing a good job but are oblivious to the issues that will be caused by their activities. That could be a field worker who forgets to take a step and causes damage; someone who doesn’t check their work and then there is damage to a client’s business or property; someone working on a computer system with inadequate training who makes an error in ordering, sends the wrong information, or misses sending a product or invoice; or someone who has limited customer service training and insults your customers, causing you to lose them.
Sadly, all of these predicaments happen too often. Why are they referred to as the 10,000 mistakes? We’ve dealt with a lot of companies who have made this costly error over our time of working together. The majority of companies will be required to pay out-of-pocket payments, which can run into the tens of thousands of dollars. That is detrimental to both cash flow and profits. On top of that, it will take you two years to recover once anything like this happens to your business since profits will plummet immediately.
You need to stay on top of things, and when you are too busy to conduct your daily routine of managing and taking care of people, you leave yourself open to the hidden problem that will emerge as a result of that, which is referred to as the $10,000 error. We want to avoid that, so how can we prevent anything like this from happening in the first place?
How to prevent costly employee mistakes in your company.
It’s not complicated at all; you just need to set certain restrictions or boundaries for the things that other people can do without getting your permission. You are going to continue dealing with everything that is now on your desk since there are no boundaries imposed on you. You will, alas, have very little time to keep an eye out for any issues that might result in significant expenses. In most cases, this indicates that you will be working at such a frenetic pace that you will fail to recognize the warning indications that something potentially disastrous may occur.
The very first thing that you are going to want to accomplish is investigate the potential trouble spots that are the most severe. Is it in the department that handles customer support, billing and collections, shipping, or the delivery of services? You will want to establish boundaries for each sector in terms of time. Begin by focusing on the one region that is now producing the most issues, or the one that has the potential to do so. Then you need to make sure that you perform the following:
1. Determine who will be in charge of that particular area Get together with them and determine what kinds of restrictions they will face that they will be able to manage on their own. Give them responsibility according to the amount of their expertise and understanding of how the firm operates as a whole. For instance, if they are new to your business but have significant prior expertise, you should start them out with a restriction that is on the lower end of the spectrum. Have a conversation about every possible choice they have to make. Continue doing this till they comprehend the manner in which you want things to be run. Test their understanding after you are confident that they have reached that level. Ask them what they would do if they had to decide on their own and why they would make that choice when the next option comes up and they come to you for advice. If they answer successfully, you are ready to outsource this responsibility to them and set a limit for what they can do.
2. Set authority limits for all employees: Everyone who works for or with your company ought to be aware of the extent of the power they hold on their own and the circumstances under which they should consult with their direct superiors. It’s possible that some new employees have full decision-making authority over whatever the organization does. Others may have more, once again depending on the depth of their experience and comprehension of the dividing lines between the many domains.
3. Educate each employee on their own personal limitations: Every member of the team should be aware of what they are able to perform on behalf of the firm without having to worry if they need to acquire clearance beforehand. The members of a team frequently lack awareness of their own limitations, which may be quite hazardous. These individuals make decisions based on what they already know, which might result in more expenses. Even something as innocuous as modifying the way in which something is sent might cause a loss in revenue for an order. Be wary of those individuals who relish the opportunity to assume the position of decision-maker. They are able to overstep their authority and cause difficulties very quickly.
4. Put their ability to make decisions to the test: by inquiring about their thoughts on the matter at hand, which is the decision that must be made. If they are capable of rational thought, then it is time to entrust them with more responsibility. Developing reports or request forms for those more significant choices is a productive use of your time at the moment. After that, you will be able to monitor the decisions that are being made before they have an effect on your bottom line. When they reach the limit, they have to go to a manager to gain approval for the next step.
5. Tell them what their limits are: You have the option of setting monetary, unit, or restrictions based on the circumstances at hand.
I. The amount that they are able to spend is directly proportional to the monetary constraints they face. When employees are travelling for work, their companies frequently impose spending restrictions on things like meals and hotels. It’s also possible that this may include acquiring equipment or materials with price limitations on individual units.
II. Unit restrictions might be based on the total number of man hours that are employed in the production of a good. The majority of department managers will have restrictions placed on the number of employees they are permitted to hire in order to achieve the desired outcomes. Theft and waste are two of the most common types of loss that may be managed by unit limitations. In the hospitality industry, spending restrictions were often imposed on particularly pricey ingredients.
III. You might be able to solve the difficulties you notice by setting restrictions that are situation-based. If the owner of a company observes that his staff are placing a large volume of orders for tools or supplies, he may choose to set spending caps in order to avoid excessive expenditures. This happened to me personally in one of the trades firms that I’ve had in the past. The installers would leave little tools at the job site, and then they would go to the wholesaler and pick up replacements without permission. When I finally got the invoice, I saw that this particular person had built up many thousand dollars in charges!
6. Design and Create Reports: Establish structures that will assist you in the handling of these newly imposed constraints. On this basis, you will be able to determine who is adhering to the new regulations and what aspects of them require modification. Redirect the folks who rapidly stray off track and make sure they understand how things operate in your organization so that they may join in.
You will be able to effectively manage your company even as it expands if you use this kind of restriction system. Once it’s set up you will be able to prevent before difficulties have an impact on your bottom line!