Business complexity will always be an issue for entrepreneurs. How do you stay on top of it all? The answer may surprise you. This post is about how to handle business complexity and is aimed at Business Owners looking to become more efficient in their day-to-day operations.

Businesses can be broken down into a few major components:

-Buildings and property

-Machinery and equipment

-Inventory of all types

-Accounts Receivable

-Accounts Payable/Owners Equity

-Personnel

Many entrepreneurs, especially those in the technology industry, have a tendency to get caught up in building or acquiring new machinery and equipment. It is very easy for this to become an obsession, because it involves having large dollar amounts of money or equity "invested" in the business. Machinery and equipment are typically viewed as non-liquid assets (able to be sold at any point), which can create an interesting dynamic when it comes time to decide what should be paid for and what shouldn't.

It's important to remember that everything your business owns reduces your ability to make use of future income immediately. This is the same whether you are financing a new computer system or picking up a second piece of property. Nothing comes free, so before deciding how much money you should be spending on equipment/assets, it's important to make sure you are taking the appropriate steps in your business plan.

There will always be a temptation for businesses to spend too much money on equipment, buildings, etc. because it is very difficult to predict how long the current equipment will actually last. A new piece of machinery may seem like it will last forever, but in reality, it can break down after a couple of months with no warning. It is important to realize that there are certain pieces of equipment that you will want to put off purchasing for as long as possible, unless you have the ability to budget effectively enough to purchase them piece by piece over years or even decades.

Also, remember that many pieces of equipment are depreciating assets, meaning they quickly lose value as time goes on. For this reason, it's best to purchase used equipment whenever possible to save money and increase cash flow for other purposes.

Inventory should be handled very conservatively as well because it is something that needs to be constantly updated to remain valuable. If you have a product that has been sitting in inventory for years, it may no longer be worth the price you are asking. If this is the case, you should either discard the product or find a way to repurpose it into something that will sell at a higher value.

The last two components of business complexity are accounts receivable and payable/owners equity. It is important to have a detailed understanding of how both of these are being handled, because they are the heart of your business.

Accounts Receivable/Payable

Many entrepreneurs make the mistake of allowing too many outstanding invoices to go unpaid for too long. If this is happening, total cash flow will suffer as the money spent on products goes uncollected. This can be OK in certain situations where you have enough money or capital to cover the shortfall, but it should always be kept under control if possible. The reason for this is that outstanding invoices will eventually catch up to you and become eternally difficult to collect.

The other side of accounts payable is the fact that too many outstanding bills can actually hurt your business with suppliers and vendors. If you are constantly in the negative when it comes to accounts payable, you will need to make some changes or risk having your suppliers shut off your credit (meaning you'll never be able to buy anything from them again). This is especially true if they do not know how much you can afford to pay them. If this happens, you might be forced to place the bill on your credit card and rack up a large amount of debt just so that you can continue to do business with them.

Owners Equity/LLC

The final component is owners equity and LLCs (limited liability companies). An LLC is what you will use to separate personal and business assets in the case of lawsuits. Owners equity is what you will use to determine how much money can be legally taken out of your company (i.e. dividends). It's important that these two remain in balance or else your company may not be able to continue operating at a profit.

An LLC is an important asset for any business owner, but it is best to avoid using one if possible. If you do not have the money to form an LLC, then try to keep as many personal assets separate from your business. This will help prevent lawsuits in case something were to go wrong with your business plan.

Most entrepreneurs can benefit from understanding how business complexity works. By being aware of how it can affect your business, you will be better prepared to control it. If you are looking to grow your small business, but don't know where to begin, this is a great place for you to start!

Employees

The most difficult thing to manage in business by far is the people. The larger the staff the harder it gets to maintain the company culture. The more complex the business, the harder it gets to stay relevant. And then there are also economic times that can leave an entire company or industry in trouble. The key is how well you deal with these issues as they arise.

It is so easy to blame your employees for their performance and let this drag on until you have reached a point when the only thing to do is fire them. But don't forget that there are a few things you could have done better in order for them to perform better. In fact, probably more than just a few.

The most difficult aspect of performance management is finding an exact cause and effect relationship between your employees' actions and results that you can put in a report. I once had this problem when an employee underperformed to the point that I was forced to fire her. Of course, it wasn't completely her fault since she didn't have enough support from superiors, but it's always easier not to accept responsibility.

Then one day I overheard two other employees discussing the reason for the underperformance. The problem was that one employee thought another was out to get her when in fact the other employee wasn't at all interested in doing so; she merely wanted to do her job well, oblivious of what others were saying about her.

How could this be? Well, people are like icebergs: you can see only their top, but also their entire underbelly. This means that you can only see what they show others, and not necessarily how they act in private or when alone. So if two employees are working on a project together and one of them keeps making mistakes, while the other never does, there's a chance that it's not intentional sabotage but rather an effect of the company culture or some other form of performance anxiety.

This means that it's not only important to have a good relationship with your employees, but also with their peers who might be able to give you insights about what goes on in seemingly one-on-one discussions.

The key point here is that you will never know everything about your employees, but the more you know, the better you can understand who they are and why they act in certain ways.

That said, it's not always easy to determine whether their actions are part of a pattern or just an outlier, especially since people like to be consistent in order to feel secure within themselves (which is important to them). So just try your best to avoid jumping to conclusions.

However, you can always choose not to accept what others tell you about your employees, but then just do whatever you want because absolutely no one will care. Believe me on that one. It's all up to you.

"People don't want to hear the truth because they don't want their illusions destroyed." --Friedrich Nietzsche

If you can find a balance between running the business side things and the personal side of things you will achieve much more productivity.

You should recognize that as a business owner it is your responsibility to take care of all things that are required to have the company running. This includes everything from paying taxes, doing accounting, managing employees and contractors, organizing events, going to meetings with potential investors or vendors and so much more. It's a very stressful job which requires a lot of work, sometimes beyond the 40 hour work week.

As if that is not enough you must also take care of your personal life. If you're thinking, "I will just hire an accountant to do that stuff" then you are wrong because they only deal with numbers and paperwork. You will still need to manage them like any other employees and usually investing time in doing that will cost you more money in the end.

So how do you handle your business and personal life? You use a Productivity Management System (PMS).

A Productivity Management System can be anything from a physical system where you keep all of your notes, to a digital solution like Trello or Evernote.

The idea is that you will be able to do all of your tasks, both personal and business-related, in one system without having the need to switch between different tools which causes distraction. The goal is to achieve maximum productivity so you can live a happier life with more free time.