Six steps to streamline your business
As your business grows, so do your activity, volume and demands on time. You have two or three or more times as much to do and the same number of hours to do it in.
Recruiting more people often costs more time and money than the problems it solves. Buying technologies to support systems and processes often does the same.
There are, however, six things you can do right now, without any additional human, capital or expense investment, to significantly improve productivity. These will give you the time you need to plan and implement your growth ahead of time, rather than feeling like you’re constantly putting out fires.
Step 1: Focus on your strengths & outsource the rest
You got into the business you are in because you love what you do and you saw an opportunity to create a profitable venture out of it. You probably did not want to have to become an expert in IT, the web, marketing, contract negotiation and all the other areas outside of your core business.
You may be amazed at the range of services that can now be outsourced. You can even ‘rent’ a CFO for one day a week when you get to that ‘too big for a bookkeeper, not big enough for a full-time CFO’ stage.
Freelancing and having ‘virtual staff’ has become a standard practice for growing businesses. Check these out:
- freelancer.com.au for virtual IT staff
- platform24.com.au if you just want to hand it all over to someone else
- virtualangels.com.au for virtual office staff
Step 2: Cut down your supply chain
Do you have more than one supplier for any product or service you use? If yes, it is likely that you are investing more in the relationship than you are getting out of it. The time it takes to research, order, manage stock and invoices from multiple suppliers, and see their representatives, is a significant burden on a business.
See if one of your suppliers can do what all of them in that service or product area are doing, and just use that one. If not, see if you can find one that can.
By having one supplier, you forge a relationship that makes them a true partner of the business, not just a cog in the machine. They will add value as they make suggestions and recommendations about your processes based on their previous experiences.
Step 3: Do less
It almost sounds counterintuitive to say that the fewer products or services you take to the market, the more profit you will have at the end of the day.
Think, however, about the time it takes to develop versions of what you offer – to design, build, test, train, promote, produce, deliver and support each variation.
When Steve Jobs came back to Apple after being fired, one of the first things he did was reduce the product range from dozens to four.
This kind of thing focuses a business’s energies, ideas and economies of scale into areas where it can deliver value to its customers, differentiate itself in the marketplace, charge a premium for that difference and increase its margins and profit – all by doing less!
If you had to pick one product or service for each market you service, what would it be? How much could you streamline your internal systems if that was all you did? Is the incremental revenue from the additional versions you carry really worth it?
If you aren’t measuring these things, it’s likely you are investing resources into areas that are not returning what they should. There is an opportunity cost for everything. Each version of a lower margin item you support costs you the opportunity for another higher margin item.
Keep the old 80-20 rule in mind: 80% of your margin comes from 20% of your products and services. Get rid of the lowest 20% and redirect the resources to the upper 20% for an instant profit boost!
Stay tuned for the last three steps tomorrow.
David Wayne, Roaring Trade Business Consultants