There is leakage in the company!

We frequently used to play with balloons in our childhood. Biggest fear of us was if there was puncture in balloons bought from the neighborhood grocery shop. It was only understood after blowing it up. But if it was punctured, there was no way to return it to the shopkeeper after blowing it up. In fact, we possess the same fears as the business owner or manager. Blowing up a balloon resembles the growth of a business. The punctures are invisible while the business is small. But as the business starts to grow the punctures starts to be seen and getting bigger and bigger. If we have a big enough balloon in size to blow it up all the way, the amount of breath out we blow into the balloon escapes totally from the punctures on it after some time or after the diameter of the balloon exceeds certain value.  The counter resembles of this phenomenon for a company is that all the gains of growth may start to leak out of the holes at some point of growth. It is possible to reduce the leakage (amount of air escaping out) if we shrink the balloon a little; but as the growth pattern of most of the businesses is a “one way” process towards growth, it is seldom to witness a strategic shrinking in a company. It is important to keep it in mind that there is a superiority of a company over a balloon; As it is not possible for a child to fill it up or repair the puncture in the balloon, it is in our hands and ability to fill it up or prevent the leakage in the company.

We are talking about leakages as loss of stocks, neglection of collection, unproductive use of labor, inefficient use of materials and machinery, loss of customers, and the inefficient use of other resources of the business. These losses become visible during the growth process if not seen before. Enlargement of the punctures during the growth in a company leads to the increase in the effects of leakages and makes them visible with the harms. It is important, for a sustainable growth, filling up the punctures in the company before proceeding for growth or during growth.

You will explore below a simple method to fill the punctures up in a company in a logical order starting from end to beginning. It is given, the methodology, below by fragmenting into smaller steps:

Planned and controlled transfer of authority in growth stages: Management responsibility and even operational responsibility in every business goes with the owner during the startup and initial growth stages. This is an inevitable and in fact, very practical resolution with respect to the sources available and the problems faced during the early phases of the business. The owner and a few numbers of staff/managers (if there are any) have to keep up with the responsibility of dealing with decisions and activities. But after some time in the growth process, they are not able to keep up anymore and this is the start point of leakages in the company. Leakages starts to form, sooner or later, in each business in which the owner insists on to keep control of everything on the way to growth. There is a need of transfer of authority at that stage. But the worse step at this stage is to transfer the authority with no auditing and control system put in place of the owner’s activities. As a result, transfer of authority is required to minimize the leakages in the company if an audit and control system is developed and put in place.

An audit system must be developed: It is already explained that there is a need from the owner’s side for transferring the responsibilities for a healthy and sustainable growth. But this is a turbulent process nearly in every company. For any activity for which the responsibility will be transferred, a control procedure must be deployed. Any responsibility transferred with no control has the potential for the company to get exposed to uncontrolled struggles. In the process of growth, it is likely to happen some blind spots and dark areas in the company those used to be controlled by the owner in the operational activities of the company during the early stages of the business. But now it is required to transfer the authority for those points of operations in the company. And now it is time to express the unexpected; If there will be no audit and control system deployed, it is better not to transfer any authority and responsibility in small companies. Otherwise “sky is the limit” for the struggles that might be faced up. That is why, it is the first step in the process of growth to delineate the activities to be audited and controlled before developing an audit and control system and then transfer the authority and responsibility.

Activities in the business should become clear and determined: The main philosophy of the business in the start up period is, “if there is a need it is visible and done”; since every single activity is in the responsibility of the owner at this stage. The need for defining these activities is not an important issue during the initial stages of growth since the owner is still able to keep up with them. This is the main obstacle for not transferring the responsibility and for no fault in transferred activities. Defining the activities to be audited is prerequisite to auditing. This needs to define the activities in the business which was not a necessity in “good old days” when nearly responsibility of everything was being taken by the owner. Then it is time to decide on “who will be doing which activity” in the company. The last step in this process is to define who will be controlling the transferred activity, with what methodology and in which frequency. This last step stands for the audit and control system for a company.

It can only be eliminated the leakages in a company, by deploying the above given three staged methodology while the company is small and in parallel to growth phases. Otherwise, most of the gains and resources of the business is lost through the holes on the balloon. We understood better how valuable resources we have in our life and in our company during the pandemics. In order to preserve those valuables and experience a healthy and sustainable growth in the company, the road goes through the above given three staged “leakage prevention system”.

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