Updated: Apr 9
People ignore problems every day. Whether it’s the check engine light in your car or the slow drip of a leaky faucet in your bathroom, we’re all guilty of choosing to turn a blind eye to problems. It’s a gamble we’re willing to take when we think the odds are in our favor. How long until the check engine light or the faucet drip becomes a real problem? Can you circle back and resolve them before things get worse?
We’d like to think we’re good gamblers when we beat the odds. But the truth is that problems have costs, no matter how long we let them go. Every day we spend ignoring a problem is costing us, and it’s especially true for business owners. The real problem is that business owners don’t know the costs of unresolved problems until they have to pay them. How long can you roll the dice?
The real cost of an unresolved issue
Consider an inefficient process. If it takes an employee 10 minutes to do something that should take them five to do, you know it’s a problem. It’s nothing catastrophic, so you ignore it. It goes unresolved for a week. A month. A year. Five years. You become complacent with it because, in the grand scheme of running a business, five minutes isn’t important. Right?
Now, let’s attach a dollar-cost value to it. Say your employee performs this task 12 times per day—that’s 60 minutes of wasted time per day (one hour). Your employee makes $14/hr., which means you’re paying them for one full hour of unproductivity per day. $14 per day still isn’t a big deal for most small business owners. How about $70 per week? $280 per month? $3,640 annually? Like the leaky faucet you ignore, this is a problem that’ll continue to drip and cost.
For an even greater example, imagine this applies to a fundamental sales or data entry process, and there are ten employees involved. Suddenly, you’re throwing away $700 each day and upwards of $30k annually on an inefficient process that wastes just five minutes.
Collateral losses are real
The cost of a problem is rarely limited to the problem itself. There are always collateral losses to consider—other wastes or problems caused by the original issue.
In the example above, consider the lost productivity. What could staff have done with the extra hour each day if they had it back? It’s impossible to put a number on that time. What if they closed another sale worth tens of thousands of dollars? What if they accomplished a different task with that hour that supported positive business operations? We can’t begin to estimate the potential gains—all we know is that we’ve realized losses.
There are also negative consequences to consider. How is this problem weighing on the business in real terms, other than cost? For example, has the time-suck of an inefficient process gotten so bad you need to hire another person?
Don’t gamble on problems
Every problem has a level of significance. Assess the cost of the problem and attach a dollar value to it. Rather than gamble, know the financial consequences behind it before you roll the dice