Whether you are taking the first steps in your new business, or you already have several years as an entrepreneur, you will have many opportunities to face problems - I guarantee it - and you will have to solve them quickly and in the best way. Problems are opportunities to improve aspects of your business. Every day you face problems of all kinds:
- related to your workers, in negotiations with your suppliers, in the supply of raw materials, in production, with customers, with the tax department, etc., etc.
Well, in your family too.
I've mentioned it to you many times in past articles: owning your own business, being an entrepreneur, it's a lifestyle and it has an impact on your personal life too. The more obsessive and dedicated you are to your business, the more success you will achieve. That affects your personal life. You will have to find a balance between your personal and business life. It is possible to achieve this.
When we face problems, we often face a mental block that makes it difficult for us to solve or to be sure that we are making the best decision. It is not for lack of capacity or for lack of knowledge. Many times it is because we do not have an organized system, step by step, to take the analysis of the problem to the search for a real solution that will solve it in the best way.
In this article, I want to teach you a simple method; but logical to solve simple and complex problems. It is a proven, logical and simple method to organize the decision-making process; And I want to teach you through 5 steps that you can apply, both to basic day-to-day problems and to truly complex problems.
The method is this:
- Define the real problem. Make a list of the relevant facts. Make a list of possible solutions, each with its advantages and disadvantages. Analyze each of the alternative solutions; assess risks and consequences Decide on the solution that can best solve the main problem.
As I told you before, the five-step method can help you solve easy business problems and also serious problems that can have serious consequences for your growth.
It can also help you deal with and solve personal or family problems… at least you can try. Personal problems are much more difficult to solve than business problems, right?
For simple problems you can use the system mentally.
In a meeting with your team you can use it to guide a discussion on a topic in a logical and organized way until together they reach a specific conclusion.
Many meetings begin with the best intention of solving a problem facing the business. They engage in discussions, each contributes their points of view, they argue; but they leave the meeting and realize that after two or more hours of discussion they were unable to reach a conclusion.
This system helps the decision-making process, it also helps guide these types of meetings, which are common in business.
For complex problems whose solution has decisive consequences for your business, I recommend that you carry out the entire process in writing in any notebook or on your computer. Write the five steps and go through the process point by point, in several sessions, until you reach your final decision.
When you're done, before final resolution and before communicating your decision, I suggest letting your ideas settle. If it is possible to wait a day or two, excellent. You go back, you analyze the whole process and if you are completely sure you communicate it so that it runs as you have arranged.
Execution is the most important step. You do not solve anything, systematically deciding if the solution is not executed.
Let's start with the 5 steps:
1. Define the real problem
This first step takes time, a lot of thought. You must strive to identify the main problem, the real problem.
It very often happens that symptoms are confused with problems. Causes are also confused with the problem. And the consequences are also confused with the problem.
Do you know what happens if you identify the wrong problem? Well, nothing! Because the decision you make is not going to solve the real problem and you will realize it very soon. Sometimes you make decisions, you execute, and the problem goes on like this. It is because it was not the real problem.
How to identify it? Think about this: if the solution you take solves the problem, it is because it was a real problem.
Like when you paint a wall because the paint is falling off; but two weeks later the paint begins to fall off again. The problem was not the paint, the wall was damp and that was the real problem. Or maybe it wasn't your wall, maybe it was the neighbor's wall or a piece of land that you have next to your wall, or a pipe that has a leak and goes through that wall. You realize?
Another example: A business is not making a profit. You might think that is the problem, but it is not. That is the consequence of the problem you should look for. The problem could be: low sales volume, low profit margins, high production costs, high fixed costs, excessive withdrawals from partners, etc. etc.
Sometimes you will encounter various problems, because the situation is very complex. If this happens you will have to tackle each main problem separately and starting with the most difficult or the one with the worst consequences.
When you think you are clear about the main problem, you should describe it in writing. Avoid the common mistake of posing it as a solution. For example, do not say: If we lower the fixed costs of this company we will solve the problem of the low profits that we are obtaining. There you are, assuming a solution. The definition of this problem could be: “The company is spending 25% more on fixed expenses than in the last period, while sales have only grown 10%.
Too extensive a definition is not necessary. You can write the problem as a question, using the words what, when, where, who, how, why. Another way is to propose using an infinitive verb, thus "Establish the best way to bring our products to the final customer, efficiently and more economically."
I hope I was clear. This first step is the most important. Until you are sure of doing it correctly and having defined the main problem, you should not go to the next step.
2. Make a list of relevant facts
This point is very important, because it allows you to separate the relevant facts or factors, the consequences or the causes.
Here you make a list - it may be extensive - of the elements that have to do with the problem that you have defined. They can be figures, they can be statistics or data taken from the market. They can also be conclusions or situations that have arisen.
This point does not include possible solutions, or solutions that have been tried. Only facts, concrete data, relevant factors related to the problem directly.
Relevant, pertinent, crucial, determining, verifiable, etc. These are the words that you should keep in mind when you write down the facts or data in this list.
You can even add conclusions, conjectures, assumptions, and even third-party opinions. You can also add data taken from publications and research.
Everything that can shed some light around the problem and that should be considered.
This last point is important.
Sometimes, after having made an important decision, someone says: "But there are data that they did not take into account, it turns out that the road that passes through that city will be closed in six months and the route…" Perhaps that single data would have changed. completely the decision made.
You will always have problems to solve.
When you are starting you will have to solve about:
- The best location for your business How to obtain the financing you require What functions will you entrust to your first administrator What will be your niche The legal framework that you will use whether or not you incorporate a partner in your business or incorporate a family member or your spouse in your adventure etc.
Well, and if you already have a business running, I mentioned the multiple situations that arise every day. There are simple, everyday problems. You will be able to make decisions on your feet, right there on the “battlefield”. Some decisions will even have to be made by phone and resolved immediately.
Other problems are very complex and require a lot of information to solve them. The decision you make could completely change the course of your business.
This 5 step method, you can use it for simple problems and for really serious problems, you could also try to use it to solve some personal problems.
You will have many opportunities to practice. In business there are always problems to solve. But remember: problems are opportunities for improvement.
This lifestyle you choose when owning your own business is a true adventure, much like launching yourself down the river in a small canoe in rough waters after a rainy day. Very dramatic? Not at all, it is your adventure, it is the adventure you have chosen. And I congratulate you!
So far the first two steps to solving problems in your business. I mention them quickly to refresh:
1. Define the real problem
I mentioned to you that it is the most important step and that you should dedicate all the necessary time to make sure you define the real main problem.
Please never go to the next step until you have clearly defined your main problem.
2. Make a list of relevant facts
This is simple, but it is the basis of the analysis. Make a list of data, facts, assumptions, factors, opinions, publications, etc. that they can support the decision and that they revolve around the problem and that they should be taken into account.
Now I am going to continue teaching you the other three steps. The whole process seems simple, and it really is! But it takes dedication and practice to master it. So keep studying and start practicing today.
3. Make a list of possible solutions, each with its advantages and disadvantages
You should start directly writing possible solutions to the problem posed. Solutions can be decisions you must make or courses of action.
For each possible solution that you are determining, you must write down the advantages and disadvantages that you find in each of them.
It is possible that looking for solutions leads you to redefine the problem, there is no problem, that is possible.
Each solution must have the potential to solve the problem.
It will seem to you that some solutions have no disadvantages; But don't be fooled, if that were the case, that would be the solution and that's it, so much analysis is over. There will be very, very important advantages and disadvantages, others perhaps not so much, but mention them equally.
At the end of this step, you may have eliminated at once some of the solutions you started with, because from the front you saw that they do not solve or have enormous disadvantages. No problem, go to Step 4 with the ones left.
In this step you really shouldn't pre-select; but it happens. So nothing happens.
4. Analyze each of the alternative solutions, assess the risks and consequences
Now, begin to analyze each of the alternative solutions. You should compare them against the relevant facts written in Step 2. Those factors are relevant facts, one could only knock down an alternative, no matter how many advantages it has.
It may happen that in all this process of proposing alternative solutions and analyzing them, other relevant factors or facts emerge, if they are pertinent to the problem, add them and take them into account. That additional information is not superfluous.
You must evaluate the relative importance, that is, the weight of each of the advantages and disadvantages. You can even compare them against your values and company values. It may be the case that a disadvantage becomes less important if you compare it against a relevant fact. For example: a disadvantage could be “the distance between the processing plant and the main warehouse”, but a relevant factor is “the cost of rentals per square meter and the cost of transportation per kilometer are 50% lower in the Area X than in Zone Y, which is 100 kilometers closer ”. If that happens, the low cost of transportation plus the cost of rent may more than make up for the distance. Less distance could be more expensive.
One of my clients had to make a very important decision. He had to choose between installing a processing plant in his new farm 150 kilometers away from where the current one was located or hiring transportation to take the product and process it in a single plant. This is a very complex decision, but one of the determining factors was that the investment in transport units and the annual cost of these transfers is much less than the financial cost of building a new plant. Of course, there were many other criteria.
As you go through the analysis, you may be inclined towards one of the solutions; but try to stay cool and objective. You might even assign a score of 1 to 10 based on how you think it best solves the problem. The highest score is for the solutions that seem the best.
Write down the risks and consequences that each of the decisions could have for the company.
5. Decide on the solution that can best solve the main problem
You start by making a list of conclusions that you have reached based on the entire process of analysis and examination of each of the alternatives.
You do not need to write down explanations, as you have noted in Step 4. Just summarize each of the conclusions you have reached.
Also don't mention the relevant factors or facts, they are already noted in Step 2. Just conclusions!
Now make the decision: What is the solution that best solves your main problem?
Rewrite the proposed solution. Describe how you can take advantage of the benefits and how to prepare for the disadvantages.
Above all, it establishes right now how the decision will be implemented, when it will be made and who will be responsible for executing it.
Start right now and define follow-up, coordination and control mechanisms to guarantee that the problem has been solved or is already beginning to be solved, seeing the benefits in the company.
Ready. We are with this topic. It is fundamental and basic, because all entrepreneurs and entrepreneurs face problems every day, some easy, others difficult. You have to solve them, ignoring them only complicates the situation and the consequences are worse.
Write down the 5 steps on a piece of paper. The next time you have a problem or have a meeting to address a problem situation, pull out the slip and let yourself go through these 5 steps. You will see that you will get better results.
I would like to know how these steps are applied to you. Would you be willing to share your experiences with us? Leave a comment. If you have questions too, of course!
