Anything with the word ‘catastrophe’ in it sounds negative, but it does not have to be. In this blog post, we take a look at how you can use the catastrophe theory to make a positive impact on your business, rather than a negative one.
What is the catastrophe theory?
Catastrophe theory occurs when you have lots of small occurrences, which eventually accumulate, resulting in a large impact. Imagine a water pipe, which keeps getting filled with more and more water. Eventually, the pipe is going to burst, right? Well, catastrophe theory follows the same principle but, of course, it’s applied to business.
How does this work from a business point-of-view?
So, let’s take a look at an example from a business perspective. A particular client was not giving their financial situation the attention it required. There were lots of small occurrences with regards to the debtors, creditors, invoicing procedures, the pricing of jobs, and the recording of worker hours on jobs. All of these small things, and more, eventually build up and impact the cash flow of the business. The profit margin of all of their products was getting sliced consistently because the pricing was wrong. Overheads were not being looked at properly because hours were being recorded wrong, they weren’t assessing fuel prices etc. and so on, and this results in a massive impact at once.
Turning the negative into a positive
You should take this catastrophe theory and turns it from a negative into a positive. It’s all about putting in small changes across the strategy, people, processes and systems, and sales and marketing. These small changes then result in a big impact, but it will be a positive one. For example, you could look into different ways that you can improve your cash flow, such as cost segregation. You can read more about this here: https://www.tri-merit.com/services/cost-segregation/. This is just one of many different ways that you can get your company’s financial efforts back on track. It is all about making lots of little changes across the board, rather than looking for the one spectacular change that is going to get you out of trouble. After all, lots of little things come together to create a massive impact, so this is how the catastrophe theory works, and it is very effective, irrespective of the sort of issue you are facing.
So there you have it: an insight into the catastrophe theory and how it can be applied to your business. The catastrophe theory sounds negative on the surface, but it is something that you can actually use to create a positive at your business. We hope that the information in this blog post will help you irrespective of the challenge that you are facing at this moment in time. Rather than letting the scale overwhelm you, take a step back and look at all of the small changes that can be made for the greater good of your company.
