Being efficient in your small business means two things – having more time to grow and more time to do what lights you up, away from the business. Who doesn’t want both?
Since launching my auto repair shop coaching business The Workshop Whisperer many years ago, I have learned the power of obsessively measuring productivity and efficiency. This is something that I coach fellow business owners in doing even if they are used to a different mindset.
We need to know our metrics – and more than just your EOFY tax return. Here are my ways to help more small businesses measure up and thrive!
- Track the day’s outputs and the months take care of themselves
Most auto repair shops operate much like old-school factories – the product is units of labour. If these places of work were a Toyota factory or a Coca-Cola bottling plant, the metrics that would come out of that factory in a day would be how many units were manufactured, what time they were manufactured in, and what waste there was. But often auto repair shop owners don’t know even if they have the ability to track that in their management software.
The lessons extend to all SMEs. Ask yourself as a small-business owner these questions every day and track trends:
● What is your business proficiency today vs yesterday?
● what was it last month, last quarter, last year?
● What tweaks can you make today and tomorrow to improve on that?
We all should be looking at our financial numbers so often that we know these numbers when asked on the spot. Smart successful SMEs know these numbers instantly. This is benchmarking your business for the future. - Becoming financially literate
Basic business sense says it is vital to look at your financial statements regularly (and not just at the end of the month or at tax time). Looking at your statements helps you understand your cashflow, helps you plan, and allows you to identify problems and inefficiencies early. Many business owners shy away from their financials because they were never taught how to interpret them properly, and assume if there’s something they need to know, their accountant will point it out. This isn’t always the case though, and becoming financially literate should be your priority. Start asking questions of your accountant, ask what things mean, and make a habit of sitting down with your reports weekly to identify trends and make adjustments. - Implement a Cashflow Management System
You can end the cycle of always being on a payment plan with the tax office, and being paid your salary last, by stopping your business from gobbling up all of its available income, and telling it how much money it has to operate on.
This might sound like a pipe dream, but by diverting your money into “buckets” at certain intervals during the month, and only allowing the business to spend an amount of money relevant to it’s turnover, you’ll:
● discover that you can pay yourself first as the owner
● always have tax put away ahead of time, and;
● still cover all of the bills and team wages.
Most business owners who adopt a cashflow management system like this find themselves largely debt free within two years, and for the first time ever are taking not only a salary reflective of the market rate that applies to the work they do but also a quarterly profit distribution that is a reward for the risk of owning the business.
