A lot of ink has been spilled writing about how to make a company better. Unfortunately, most of that advice is geared toward large businesses with hundreds of employees rather than the bulk of small businesses worldwide.

Regardless of your business size, you must start with your core problem.

It's easy to think that you have a handle on what's happening in your business, what problems you're facing, and what you need to do about them. Business problems are like a weed. You can often see them sprouting from the ground, quickly cut them down, and move on. You realize you never addressed the root until the weeds start growing again when it feels too late.

See, most problems keep coming back because we don't eliminate the source of the issue.

It would help if you had a deeper understanding of your finances to find the root cause of your business's issues. Start with financial information, identify the impact of your problem, and then implement a measurable solution.

Start with your money.

Every business has a financial story: how income flows into your business, how money moves through accounts, and even the monthly profit you generate. All of these things combine into a narrative explaining the progress of your business.

Money tells a story, and that story can help you identify the source of a problem.

For example, if your business is losing money every month, it's easy to recognize when taking the time to understand your financial statements. By scanning your Profit and Loss statement, you'll quickly see that your income is less than your total expenses. With a quick read of your financial story, you now understand that you either need to cut costs or increase sales.

Identify the impact of the problem.

Taking the time to understand your financial story allows you to identify improvement areas quickly. When a business loses money, it's often evident in the Profit and Loss statement. However, the decisions that led to those numbers are often the most significant factor in creating change.

Let's say your business is losing money every month. We know there are only two real solutions: cut costs or increase sales. That begs the question: why are costs high in the first place? On the flip side, what's causing sales to be low? You can quickly answer these questions by considering how your business generates and uses its resources!

Perhaps costs are high because the business must pay out salaries every month. Sales figures are low because there are not enough new leads coming into the business every month. Let's say our costs will remain the same even if sales increase; in this case, salaries are a fixed expense. With that understanding, we know that the problem to focus on is generating more sales. While we can cut our costs by reducing salaries, the business must create more money to survive long term.

Implement a measurable solution.

The great management guru Peter Drucker once said, "what gets measured gets managed." It's true - when we consistently measure something, whether it's sales, payroll costs, or any other financial metric, we become more conscious of how it impacts our business. The only accurate way to know if something is improving is to measure its progress.

By looking at your financial information, you've identified that your business is losing money every month. You've taken the time to understand the problem's impact and what decisions led to it. It's clear that the solution is to generate more sales, so you decide to implement a marketing strategy that helps bring in new, qualified leads for your sales team. After a few months, has your revenue increased, decreased, or stayed the same? By measuring your marketing strategy's impact, you can quickly identify whether or not it's an effective solution!

Using this framework to identify the core issues in your business helps you ensure that you're addressing the root of each problem. By fixing the source, related problems will begin to wither away. Your business will grow, and you'll find new things to improve!