Are Bad Habits Holding Your Business Back?

“Winning is a habit.  Unfortunately, so is losing.” – Vince Lomdardi

In a world that is moving so fast, habits that were once good can soon become outdated and this is very apparent in finance and accounting.  A business is a living, breathing thing, and it has to constantly adapt to new technology and new legislation.

Companies will spend thousands on changing and improving the habits that seem most obvious, such as sales and marketing strategies, getting the latest software; anything that keeps them at the cutting edge so they can attract new business and retain customers.

Unfortunately this is not the case for the finance and accounts departments.

Like so many of the hidden ‘back office’ non profit making departments, finance and accounting gets the raw end of the deal and is almost a forgotten world.  With a lack of funding and resources some finance and accounting departments are forced to rely on the old habits such as using outdated systems, duplicating work and going through repetitive manual tasks.

It is not always the company that is to blame, this can be the world of the finance manager who clings to the old habits no matter how much extra work is created, simply because this is how things have always been done; this is where they feel comfortable.

Change - Photo by Ross Findon on Unsplash

In order for a business to grow, you need all parts to be working at the same level; it’s no good one part moving forward if another is static, because one will always be dependent on the other and vice versa.

There is a brilliant book called ‘The Power of Habit, why we do what we do and how to change’ by Charles Duhigg which gives numerous examples where sticking to the old habits can have terrible results, in some cases resulting in fatalities.  The most successful companies are those who change their bad habits.

The book also shows that you do not have to make massive changes; ‘small wins’ can have a ripple effect, which can change the whole dynamic and culture of a company.

When Paul O’Neill was appointed as the new CEO of the Aluminium Company of America (Alcoa) in 1987, he announced to a gathering of every major investor that he “wanted to talk about worker safety.” This took everyone by surprise because they were expecting the usual ‘new CEO’ speech filled with the usual sales drive and cost saving talk.  He did not mention profit or taxes, just worker safety.  The investors were worried that they had got the wrong man, but Paul O’Neill’s way of working actually made the company more successful.

If I told you that your finance department could help increase profits, you would probably laugh at me; but I believe that it is a secret weapon that very few companies use to their benefit.

Silence

Think about it.  This department gives you the most important information a company needs in order to exist; its accounts.  Accurate numbers not only show you how well the company is performing, but they can highlight areas to save costs, show which projects are actually worth doing, and much more.

It’s no coincidence that the companies I have seen that struggle the most (and there are lots) are the ones who treat finance and accounting as a necessary evil, one that is not worth investing in.  They end up with numbers that are not accurate, and this causes all sorts of problems.

As soon as improvements are made, even small ones, the positive effects filter through the whole company.

It’s about working smarter not harder.

Ref: The Power of Habit, Why we do what we do and how to change – Charles Duhigg

Published by Kim Masters

Kim is a South African living in Bedfordshire. She specialises in helping businesses and individuals with their finances, combining her 25 years of accounting experience with her passion for healing therapies.

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