Business smarts TAX AND FINANCE
CHAOS VERSUS ORDER Business is a tug between forces of chaos and order. In today’s uncertain environment, it helps to focus on the things we can control within our business, as Brett Crombie explains. AUTHOR: BRETT CROMBIE, STRAIGHT EDGE ACCOUNTING
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s I write, yet another wave of Covid-19 in the form of Omicron is sweeping through the country and impacting businesses in all the ways we are now familiar with. For the past two years, business owners have become used to the constant uncertainty that the pandemic has caused. They’ve coped with the primary impact of sickness amongst staff, plus the secondary impact of things like reduced turnover, supply shortages and dramatic changes in inflation and interest rates. This constant shifting of the business environment gives rise to a helpful way of thinking about business as a tug between forces of chaos and forces of order. All businesses have some things in common. They take resources such as money, assets, skills and work, and join these together towards producing a state of order for clients in the form of a product or service. Plumbers, for example, combine plumbing skills, experience, specialist tools and work effort to produce orderly plumbing for each client. Put another way, all clients are ‘buying orderliness’ in some aspect of their lives, be it a new bathroom or a cleared stormwater drain. Along this journey from resources to the final product or service, forces of chaos act to upset and distract the business, while forces of order serve to help the business.
FORCES OF CHAOS Anything that increases uncertainty is a potential source of chaos. These may be external to the business or internally generated.
Examples of external chaos Pandemics Global warfare Supply shortages Economic instability.
Examples of internal chaos Planning blunders Scrappy bookkeeping Inconsistent work effort and quality.
VS FORCES OF ORDER By contrast, businesses also have stabilising forces, which act to repel the chaotic influences. Most forces of order are internally generated by the business owner, rather than imposed on the business from the outside.
Examples of internal order Consistent and high-quality work Written processes and systems Clear communication Attentive bookkeeping Smart use of technology.
Applying these concepts to your business Thinking of your business as a tug of war between these opposing forces can help focus attention on aspects of business that are controllable, yet sometimes neglected. A focus on strengthening the orderly aspects of your business will inevitably flow through to the final product or service. For example, businesses with orderly bookkeeping also tend to get their quotes and invoices out promptly, price jobs accurately and maximise tax deductions. There is also a strong psychological component to having these things in order. It feels good and generates confidence. Importantly, the consistency and savings resulting from this bookkeeping orderliness all eventually flow through to producing consistency and quality for clients. While there will always be many aspects of business that are imposed upon us, it is worthwhile to focus on orderliness in those areas that can be controlled, especially in uncertain business environments like the current one.
About the author: Brett Crombie is a trade specialist accountant at Straightedge Accounting. For assistance developing a business plan, or for tax and accounting services, contact Brett on 021 301 022 or email brett.crombie@straightedge.nz
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