- Do you have a company culture of continuous improvement?
- Are you dedicating 10% or more of your time to working on your business?
- Do you delegate parts of your business and have a methodology for holding people accountable for performance?
If you are not, you are impacting your profitability in a big way.
As a business owner this is coming right off your bottom line. If you are losing $10,000 in costs (i.e. profit) and you have margins of 5%, you would have to earn another $200,000 in revenue to make that back.
Business advisors like Jeff Pallister can come into many businesses and easily find $50,000 in savings in a short period of time. He does this largely by tapping into the latent talent and creativity of your existing team.
Recently I had to step into a business process and get some work done that was languishing. The people currently doing the work did it in short bursts and then did something else; the work was cyclical. Because I wanted to do a large batch all at once the flaws in the process became painfully obvious. Because I am very time constrained I elected to fix those processes. The result was that I was able to do the remaining work in 50% less time, saving 10-20 hours of effort.
The “E-Myth Revisted” by Michael Gerber promotes the idea of the entrepreneur(s) learning and doing each role until they understand it and make it repeatable and efficient. Only then should you hire someone to perform the role. This is part of the idea of running your business as a franchise, even if it won’t be.
Now this is not the only way to do it. But as an entrepreneur you must own the “creation of your business”. You can delegate pieces but you must train, coach, measure and hold accountable all of the people you have delegated the process to.
Over the period of a year we spent 500 hours supporting, upgrading and administering one application. A 10% improvement in overall efficiency could translate into 50 hours of savings a year.
As the president I am an expensive resource as are some others in the company. But once the process is more efficient and predictable you can delegate certain work to less expensive resource without the risk of having it all fall apart. Now you have a double savings; $5,000 becomes $10,000 or more.
This is only one process out of a lot even for our company.
It is likely you are sitting on a lot of lost opportunity as well. Maybe even your ability to grow or become great!
How It Works
There are several things you need to do to successfully work on the business. Other than customers and your product and services; building a great company involves three things that often get overlooked:
- The strategic plan and execution;
- Working on the business (processes, systems, tools and infrastructure); and
- Developing your people.
Working on the business means:
- Defining the things you need to measure (KPIs);
- Defining your business components (processes, systems, tools and infrastructure);
- Aligning the business components with your strategy, values and people; and
- Making your business as efficient and predicable as it can be.
Using a proven methodology is a great first step. Using a tool like Manifast to reinforce the process and streamline the tracking is even better.
Well you could use a percentage of the increase in profits to self-fund a profit sharing plan. Most people also want to be efficient and produce at the highest level possible. They just need to know how to keep score and have the time and tools to do it.
What about you?
How much time do you spend working on your business? How much money might you be leaving on the table?
What action are you going to take? Today?
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