Problems, opportunities and mathematics

During this past week, all over the U.K., young people have been returning to school to begin a new school year, following the long Summer holiday.

After seeing my own daughter off to her school, I briefly thought back to my own High School days.   Mathematics was not a subject that I really enjoyed very much, which might be a surprise to you bearing in mind that I am now an accountant.   For me, the reason why maths was a subject to be endured rather than enjoyed was due to the teacher telling us in every lesson to; “look at your books, and solve the problems on the page in front of you!”  

Excuse me!  As a teenager, I didn’t have to look up problems;  they just seemed to come along.  It was difficult enough trying to come to terms with the fact that it was unlikely that I would ever score the winning goal in an FA cup final, captain Wales at rugby, and win the mens 100 metre Olympic final all in the same calendar year, without being presented with problems to solve from a text book.

Just as I was coming to terms with this awful realisation, my eyes were opened.   During one maths lesson the teacher told the class that if we moved a number from one side of the equals sign ( = ) to the other then the negative figure would become a positive figure.   WOW!

So if :-

(5+9-6) = 8

It would be equally true to say that:-

(5+9) = (8+6)

Just the other day, I met a business owner who was struggling with problems in his business.   As he finished relating the story of falling sales and increased competition, I thought back to my old maths teacher and his instruction as to how to solve a (maths) problem:-

1. read the question
2. analyse the data
3. solve the problem.

After hearing the story, I began to analyse the data.   We both discovered that the real problem was low profits resulting in poor, even negative, cash flow.  So, we both began to examine ways where profits could be increased, I explained that if the costs could be reduced, even if sales were to remain as they are, then the net effect would be increased profit and ultimately, improved cash flow.  After examining each expense heading, we were both able to identify significant cost savings for the business.

Next, we looked at sales.   I needed to understand whether there was still any demand for his product, and what are his customers buying habits.  I questioned whether he had carried out any customer survey.    He thought back to customers that he had lost and why they had gone elsewhere;  some had said that they were now able to buy online, others said that there were additional services that they were now offered by their new supplier and others spoke of the quicker turnaround time after placing the initial order to receiving the goods.   He has now decided to communicate with existing and past customers, to review how he sells his products and identify ways in which he can sell extra services.

Finally we looked at working capital;  stock, debtors and cash/bank.  We concluded that too much money was tied up in holding stock, and that if he purchased on-line himself then stock levels could be reduced due to shorter delivery times, and advantage could be taken of direct delivery from the supplier to the customer.   If the customer could purchase and pay on-line too then this would reduce debtors and increase cash flow.

At the end of the meeting, the owner realised that these problems now provided him with exciting opportunities.  He is now determined to turn the negatives into that which is positive.

How do you view problems in your organisation?

Advice:  Take a step back, analyse the data, see the opportunities and make a plan.  Ask your customers and other stakeholders;  there probably is an opportunity waiting just for you.