Understanding Your Business Interdependencies

One commonality amongst all businesses, whether they be a garage start-up or a fortune-500 company is the existence of interdependencies. Interdependencies come in two ways:

•  Critical Inputs- Simply put: stuff needed to do your job.
•  Critical Outputs- Stuff you produce that others want or need to do their job.

These inputs and outputs may be anything from information to goods and services to utilities.

Understanding the relationship of these dependencies and how they impact your business is critical to anticipating potential interruptions and proactively planning to ensure you are operational, not matter what. Understand that even if YOU are well-prepared, relying on a supplier of a critical input may be risky if they are not prepared. The end result is the same: your critical input is interrupted and so is your business.

By the same token what about those clients and customers who rely on your critical outputs? They will need those things you produce to ensure their continuity of business. If you cannot provide their critical inputs, they may go somewhere else. In some cases, like with tax information, there could be stiff penalties for not being able to produce your critical output.

Some key points to remember about critical inputs and outputs

•  Critical inputs are ANYTHING you need to do your job (if you sell popcorn, popcorn kernels are a critical input).
•  Critical outputs are ANYTHING that you produce that is required by someone else (selling your popcorn to a store).
•  Don't assume that a client, customer or any other party (like the IRS) will patiently wait for your output. Remember, what you produce may be critical to their business operations. If you can't produce it in a timely manner, they'll either go somewhere else or (in the case of the IRS) penalize you.
•  Remember that while you may be well-prepared and ready for a disaster, a supplier of a critical input of yours may not be. If they are interrupted, you will be too.
•  Don't assume. If you are unsure about something regarding your critical inputs or the outputs you produce for a client, have a friendly chat. Start the dialogue. Either confirm or reject your assumptions, so that when a disaster does occur, there won't be as many unpleasant surprises.
•  Make sure your suppliers appreciate the importance of their critical outputs that become your critical inputs. They may not understand something they produce is vital to your operations.
•  Periodically review to avoid complacency. Your business is not static. It's a dynamic, ever-changing operation. Review your inputs and outputs. Make sure you understand the current realities of your business.