Identifying Blind Spots Within Your Company
No matter how successful your business is, there are likely various opportunities for blind spots to exist. (In fact, thinking that you don’t have any blind spots can create more blind spots.) A blind spot within business entails lacking visibility or insight into some aspect of the company, whether it’s financial, organizational, managerial, or operational. Often, these issues arise from a disconnect between an area of the business and the decision-making that affects it. Here, we’ll discuss common business blind spots and best practices to identify and address them.
Blind Spot #1: Taking a Reactive Approach to Risk
As a business owner, you juggle multiple responsibilities, oversee a number of processes and projects, and wear numerous hats. The last thing you want to worry about—on top of everything else—is someone or something undermining your hard work and success. Unfortunately, every business is susceptible to risk, be it in the form of fraud, competitors, or general lack of visibility.
It’s tempting to only worry about handling problems when they arise and prioritize your time working on the business. However, by only reacting to risk, rather than preventing it, small problems can snowball into big issues. One simple solution is to implement preventive controls, which help to avoid errors and discrepancies from occurring in the first place. Preventive controls similarly aid in verifying accounting accuracy and eliminating the possibility of employee fraud. Common controls include:
- Separation of responsibilities
- Controlled access to systems
- Limited involvement from management in financial reporting
- Expense verification
- Limited employee access to assets, such as cash or equipment
Preventative controls should be integrated into your business’ regular processes so that they take effect on a continual basis.
Blind Spot #2: Making Leadership Decisions Alone
Running a business can be overwhelming. Even the best leaders can become hindered by decision-making overload or tunnel vision, consequentially leading to blind spots. It’s crucial to include a diverse group that can provide different perspectives and insights for the overall well-being of the business. This group should include key stakeholders, such as employees, clients, contractors, suppliers, investors, and outside consultants. Particularly for financial decisions, it can be highly beneficial to contract a fractional accountant to provide consulting and aid in budgeting and reporting processes. Outsourcing some of your decision-making can give you access to objective guidance while saving on costs.
By requesting and incorporating feedback from a broad range of voices, you ultimately decrease the possibility of blind spots hindering your business.
Blind Spot #3: Not Documenting Processes
Process documentation entails capturing each step within a given task. Often, documentation doesn’t occur until an inciting event, such as a new employee hire that needs training. Similarly, many small businesses don’t have any sort of process documentation. Ideally, however, documentation should happen on an ongoing basis. This helps you and your employees to be able to see which procedures are working, and which are less effective or in need of change.
Process documentation is a highly proactive measure to avoid blind spots. You can’t know what the inefficiencies within your business are if they aren’t regularly being documented and reviewed.
Blind Spot #4: Not Focusing on Industry Changes
With the consistent emergence of new technologies, change in any industry occurs rapidly. While it’s easy to rely on the same methods that brought you success in the past, being unable to adapt to a changing business landscape can lead to not only blind spots, but the downfall of your company. In fact, adaptability is one of the most desirable characteristics in the professional world, and one that is most indicative of long-term success.
The 2020 pandemic is a recent example of how unforeseen circumstances can force businesses to completely alter their processes. For many industries, the ability to adapt was key to survival. Often, business owners may not recognize the need to evolve until their business has reached a crisis level, such as being pushed out of the market by competitors, or rapidly losing clientele. To prevent this, it’s crucial to pay attention to business trends and incorporate flexibility into annual operating plans.
Blind Spot #5: Not Prioritizing Financial Reporting
Perhaps the biggest and most damaging blind spots are those related to the business’ financials. This is why accurate financial reporting is crucial. Without it, business owners have no visibility into profitability; growth cannot be monitored, and actual results cannot be compared to budgets and forecasts. Many businesses operating on a cash basis, rather than accrual, may think that they’re doing well when there’s money in their accounts—but they have no insight into timing of accounts payable or receivable, nor do they know how profitable their business actually is.
A strong financial plan based on reporting can help mitigate risks and challenges as they arise. Similarly, having a high level of visibility into your business’ financials can help you make strategic decisions regarding operations, investments, and growth. If you don’t know where to begin, this is another excellent area to bring in an outsourced, fractional consultant. They can build a strong base of reporting based on historical data, as well as build projections for the future of your business—eliminating financial blind spots that may exist within your business.