You began your business because you were (and are!) passionate about your industry. Because your…
Who’s Really Running Your Business?
Do you feel like you’re constantly doing everything but getting nowhere?
Do you want a more sustainable and profitable business? Well, it’s easier than you think because by reviewing even just five areas within your business, you will be amazed at how much time and money can be saved.
For many business owners, they can feel like everything and sometimes everyone is running their business instead of them. These possibilities or as I call them ‘Wolves’, can include:
- Your clients.
- Your team.
- Something or someone else.
Maybe you have more than one ‘Wolf’ in your business, or maybe you just avoid the conversation with yourself because you know it’s really you; caused by your decisions (or lack thereof). From my experience with Small Business owners, I generally see six common ‘Wolves’ which are influencing the question, “Who’s really running your business?”:
- The word, yes.
- Cash flow.
- Staff (including contractors).
I wonder if one or all of these apply to you?
Did you know many businesses could become more sustainable and profitable (and thus address many of these ‘Wolves’) if they simply reviewed their internal business systems to ensure they were operating as effectively as possible?
But as we know, many business owners or managers focus solely on the day-to-day activities rather than putting time aside to ensure that unnecessary and controllable costs have not crept into the business. But even once you’ve made the decision to work on your business, what then? Where is the best place to start?
Often the areas costing the most, especially in terms of time, can be hidden and/or qualitative costs so here are five common areas to start reviewing within your business:
1. Lack of documented procedures.
- Decrease in consistency and quality.
- Poor induction.
- Different/lack of understanding of requirements.
- Increase bad habits.
- No back up when people are away.
- increase inefficiency.
- Develop flowcharts and documented tasks for each position/work function.
- Ensure at least one extra person trained in each position/work function.
- Develop templates to streamline work and ensure consistency.
2. Being too nice to your clients.
- Being available 24/7.
- Clients running your business, not you!
- Little or no holidays/time with family and friends = No Life!
- Starting work without $.
- Not always being available for clients but rather having blocks of time for client meetings and phone calls.
- Categorise clients as A, B or C and determine processes for each.
- Start work once deposit paid.
- Charge for variations to agreed brief/fee proposal.
- Don’t give away the world for $0.
- Review hours and priorities to regain work/life balance.
3. Only verbal advice/instruction to your clients and/or your team.
- Increase different or misunderstanding – I said/they said.
- No written back up – legal ramifications.
- Reliance on memory – yours and theirs.
- increase in communications problems.
- Write it down – email follow up.
- Using email or tracking software to keep clients informed about their work.
- Develop client information about what will happen on a job/expectations – ò client phone calls and emails
- Support verbal instructions/advice with written back up.
- Put FAQs on the website.
4. Lack of attention to detail.
- Increase in rework.
- Decrease in productivity.
- Decrease in profit.
- Increase attitudinal issues.
- Domino effect on other jobs.
- Increase in professionalism -> performance management.
- Get it right the first time.
- Instil pride in work.
- Educate team re true costs of rework = decrease profits -> decrease jobs
- Checking is everyone’s responsibility.
5. Not charging enough, i.e. inaccurate hourly charge out rate.
- Rate not covering all business costs.
- Rate not including profit.
- Just charging market rate rather than at least break-even figure.
- Rate not including PI insurance run off figures.
- Gain advice from accountant re actual business costs – not just an estimate, e.g. 20%.
- Using excel spreadsheets or other applications to accurately calculate hourly charge out rates as well as calculating budgeted hours and costs for all parts of a job (including your time and administration).
- Know break-even figure as well as profit (not just turnover).
- Review business costs to reduce where possible, e.g. stationery, fuel, incidentals.
- Review charge out rates when salaries change.
Remember the words of William Arthur Ward, “Most of us are too critical of ourselves, but not critical enough to make any changes.”
So who is really running your business? And if it’s not you, what’s going to be your first step to changing this?
“The opinions expressed by Smallville Contributors are their own, not those of www.smallville.com.au"
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