COMPLICATING FACTORS
My model took all of the known, constant pieces of the business and rendered them as a static model. But businesses are constantly in motion and frequently in flux. Missing from my model were these more dynamic functions.
Let’s return to the car example. A car can have all the requisite parts, all in working order. But without fuel and a driver, it’ll never leave the garage. Likewise, a business requires fuel (in the form of capital) and drivers (in the form of employees.) in order to operate properly. You can have an amazing business idea on paper, but without the financial and human resources to make it go, it’s going to stay on paper.
Your business needs money for things like:
- Starting up (equipment, desks, signs, etc.)
- Staying running, even if it’s not profitable at first
- Paying employees
- Buying materials (or whatever it takes to make your product or service)
And it needs people to perform all the tasks related to the functions you outlined earlier: producing, designing, marketing, selling, etc., etc. etc. It needs leaders to oversee those people and assistants to support them. It needs people to clean the bathrooms, take out the trash, reboot the computers when they crash and unjam the copiers when they get jammed.
With a good driver and a full tank of gas, you can take your business almost anywhere. But people and money can also be major factors in whether a business gets stuck, or worse yet, crashes.
People have personalities, individual talents, personal interests, fallible bodies, and lives outside the office. Money, meanwhile, circulates through a giant, international network, that is influenced by everything from politics to weather to cultural trends. A well-matched team of employees, each performing a job ideally suited to him or her, paired with a booming economy, a large initial investment, and high market demand is an ideal environment for business to flourish. But if your Director of Marketing and your Director of Outreach can’t get along, if your best salesperson gets the flu or quits, if consumer spending drops following a White House Scandal, if Apple just released a new product lighter and smaller than yours…any of these factors can have a negative impact on your business’s efficiency, output, and profit.
People and money are dynamic elements in a business—hard to predict and even harder to control. I’ve certainly experienced this in my career.
Flash back to 2008. My 1-800-GOT-JUNK? business was doing great. So great that I bought two new trucks in the early summer, bringing my fleet up to 14 trucks. Everything seemed to be going my way until a few months later, when the economy tanked. I had to sell the two trucks at a loss. If I didn’t have eight trucks already paid off—and if I hadn’t cut staff levels quickly—this situation could have tanked my businesses.
My example points to yet another complicating factor that was missing from my original picture: time. For some businesses—like landscaping, say—timing is an obvious factor. There’s a fixed window of demand for your services and distinct seasonal functions. But the choices we make about time, the ways we structure and manage it, are critical for any business. Think about it: When you start your business, how long you give your business to succeed, what kinds of deadlines you set and whether or not you meet them are questions that can make or break you, whether you cut lawns, sell sweaters, make airplanes, or haul junk. The timing when I bought those two trucks in 2008 was just plain bad!
- Businesses are constantly in flux.
- People, money, and time are dynamic factors in a business.
- Most models do not account for the dynamic nature of business.
In the next section you will learn about a new way to model your business that accounts for dynamic elements and change over time.