Streamlining your business

Owners of small businesses are particularly concerned about productivity.  For a small company the difference between being highly efficient and moderately efficient can be the difference between profit and going out of business. Most efficient  practices are also applicable to personal productivity as well. However, with businesses, small productivity gains can be replicated over many people multiplying the  gains well beyond the benefits you’d get just for yourself.

A focus on productivity can let you cut your costs so you can make a profit even when your competitors are losing money. Here are eight key points to consider when establishing productive practices for your business.

  1. Simplify your processes.  Many processes become complicated over time.  By simplifying these processes you can make your processes more repeatable.  Also, simple processes are easier to automate, outsource, or pass on to less expensive employees.
  2. Automate your processes. Human time is expensive.  If something can be done by technology, you should seriously consider automating it.  Always do a cost benefit analysis in deciding what to automate.  Start with the things that give the best return on investment.  A $5,000 investment in technology to eliminate $50,000 in labor costs is a no-brainer.  A $100,000 to eliminate $3,000 in labor is probably worth passing.
  3. Measure everything. If you are serious about being productive, you need to be a good manager and measure all the important parts of your business. It is surprisingly easy for the daily effort of running your business to obscure the big picture of where you are spending your time and money.  Having good measurements in place will let your employees better understand how they are doing and will give you a basis for doing reviews.
  4. Standardize where you can. You only want to have to solve problems once.  By standardizing,  you can reduce the number of things that can go wrong. This gives you more time to concentrate
    on your business. For example, if you have 10 computers in your office, it will save you time if they are all the same (or similar) models.
  5. Think about the total cost. Don’t just look at the original cost of purchases.  Think in terms of the cost over the entire useful life over time.  For example, I used a discount host for my business website and email.  The pricing was very inexpensive.  However, the email went down at least once each week and required about an hour of my time working with them trying to get it back up.  I finally switched email to another more expensive host because the “cheaper” host was so expensive in terms of the amount of my time that it required.
  6. Focus your time. Many business owners combine their work and personal lives in unhealthy ways.  When you are working make sure you are able to give your total focus to working.  When you are relaxing, don’t be preoccupied with work.  It is easy to merge everything together so you don’t ever really get a chance to relax.
  7. Invest in education. Time spent on education can give some of the highest rates of return.  If you spend 5 hours per week for 18 weeks increasing your skills in a way that will save you 10 hours
    per week for the rest of your life, it is a very good investment.  It is hard to measure some of the return on education because it can often times open up avenues that weren’t even possible for you before.
  8. Solve problems once. When faced with a decision, try to see beyond the specific problem.  For example, don’t think in terms of “Mrs. Jones didn’t pay her bill.” Think in terms of “Some
    customers might not pay their bill on time–how should we handle late payments?” If you can understand the general issue behind the problem, you may be able to come up with a way to handle the general problem that eliminate it all together or allow you to create a policy that will let other employees deal with similar issues in the future without requiring your attention.

Originally published on October 2, 2006.

Comments

  1. Paul Singh says

    Great points — though, I usually advise my clients to start with #3 first.

    Before you start making any changes to the business, it’s worth spending a small amount of time to measure what you’re currently doing. Without that baseline, you’ve got no way to determine if your changes work better… or worse.

    For most businesses, “man hours” is a great generic metric that you can measure with almost no work. (e.g. “my sale to cash process takes about 3 hours per deal.”) With that number in hand, you can start working backwards to bring the number down to something on the order of 30 minutes or better.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>