Internal causes of the problems your business is experiencing refers to problems arising internally to the business. Perhaps though management lapses or poor planning.
Don’t beat yourself up over these problems. Even giant companies, like banks and car manufacturers, can implode.
Take the position “it is what it is and how do I get out of this situation”.
Sometimes you know what is wrong internally. You might be running out of cash to pay your bills. Other times it is not so obvious. Your Revenue might be going up but, perversely, Profit is going down! What unknown factors are causing that?
Here are four tools to help you work out the root causes:
- The Diagnostic System is bundled up with this Campaign. You have two paths through this drill down self-diagnosis tool:
- If you know what is wrong, go straight to Diagnosis to see a range of problems and possible Treatments.
- If you don’t know what is wrong, work down the Symptoms path in the Diagnostics System using just the signs of the problem. For example, Gross Profit is falling and you don’t know why. Arrive at a Diagnosis and eventual set of candidate Treatments for the problem.
- Use the “5 Whys” technique, that came from Toyota and others, as a means of working out potential root causes. Start with a question like – “Why is my Gross Profit falling”? Think up all potential reasons and then ask “Why” is each of them occurring; and so on for 5 cycles. Read more about this technique on this link to the 5 Whys article.
- There are several tools in the Board family that crunch your data and suggest reasons for your problems. The most useful is the TrendBoard. This analyses several periods of your past accounting data to see what has changed. TrendBoard is available separately. You can find out more on this link to TrendBoard.
- One less scientific, but nevertheless useful tool, is to use your gut judgement to identify what’s wrong. Better yet, also get the advice of some other experienced business people to see what their gut tells you. But, remember that flying by the seat of your pants might be the reason you have this problem. So, always try to test your gut feeling with the Diagnostics System to see if it plausible.
Your job in this part of the Lesson:
Use these tools, and your intuition, to identify problems that need to be fixed to stabilise your business.
The next topic will help you select where you are going to start fixing your problems.