The Cost of Chaos: Is Your Business Paying the Price?

Chaos in business is costly. Whether it shows up in the form of confusion, lack of order, or even complete disarray, you’re not alone – company chaos is more common than you might imagine!

In a recent CohnReznick CPA survey, more than 200 senior-level executives in various industries were asked about chaos in their organization. The survey found that an outstanding 91.9% of respondents identified chaos within their organization. Shockingly, only 27% stated that they had plans in place to fix it.

Revamping business operations to reduce chaos can be a daunting task. However, it is essential for companies to stay competitive and remain successful. In this article, we'll discuss where chaos commonly exists within companies, and where to get started when it comes to reducing and ultimately eliminating chaos.

Where Chaos Commonly Shows Up

Chaos can show up in a variety of ways within a company. However, there are some common, tell-tale signs that the cost of chaos is taking a toll. These include, but are not limited to, the following:

• Not having a business plan. Without a clear plan, it is difficult to know what goals to strive for and how to measure progress. This can lead to confusion and disorganization, leading to chaos in the business.
• Not having defined processes. If your processes are unclear, things can get messy fast. Without standardized procedures, it will be difficult to track your activities, let alone identify areas of improvement. After all, you cannot make process improvements without a process! Moreover, undefined processes result in disorganization and lack of clarity at all organizational levels, which can result in mistakes, delays, and confusion, which can all contribute to chaos in the business and even impact customer satisfaction.
• Lack of accountability. If you don’t have defined processes or a clear overarching plan, chances are there is also a lack of clarity when it comes to organizational roles and expectations. Without defining or communicating what’s expected, it’s impossible to hold people accountable to a standard, which can result in organizational dysfunction and ultimately chaos.
• Not paying attention to your data or measuring performance. Without data, business leaders tend to make decisions based on gut instincts or surface-level observations, resulting in misinformed reactions. Without understanding your numbers, you won’t truly know (let alone understand) how your business is performing, and will likely respond from a reactionary, frantic place rather than through the development of a thoughtful strategy based on data-driven insights.

How to Eliminate Company Chaos

There are many actions that business leaders can take to reduce and ultimately eliminate chaos in their organization, and increase both profitability and efficiency as a result. Here are a few of the key elements to developing a chaos-free and future-focused business model.

• Build an annual business plan. Prior to the start of each year, it is crucial to have a roadmap for success for what success looks like, and a plan to achieve it. This business plan should serve as the backbone for your organization, and eliminates chaos by prioritizing a central focus that is in alignment with strategic goals and objectives.
• Revisit your business plan monthly. These monthly meetings are key to ensuring that you stay on track, and should serve as a time to evaluate progress, identify areas of improvement, and make shifts accordingly to ensure you are still on course. Being consistent, proactive and clear about where you currently stand is critical to success.
• Ensure you have timely data. When you have your monthly meetings, how will you know if you are on course if you don’t have up-to-date numbers, including financials and other KPIs, to analyze and reflect on? In order to make effective strategic decisions, you must have your finger on the pulse of your numbers at all times, and a sharp data-driven team to help you access them quickly and efficiently.
• Ensure you have accurate data. Efficiency is only one piece of the equation. To ensure you are correct about the state of your business, you must have confidence in the accuracy of your data. This not only means verifying your data, but also ensuring a big-picture view, where no critical pieces of data are left out. Having accurate data is essential for making sound decisions and ultimately eliminating chaos.

Chaotic businesses are unsustainable businesses. Even if your company is surviving today, one strong wind – whether a shifting market condition, an internal issue coming to light, or an unexpected loss —has the potential to blow everything over, if you fail to build a stronger foundation.?

By taking steps to eliminate chaos and staying future focused, you can ensure that your business stays ahead of the competition, remains resilient, and ultimately achieves profitability.

Is the cost of chaos plaguing your business? Our team of fractional CFOs and profitability partners at Blueprint CFO can help. Let’s start the conversation!?