Too often, entrepreneurs who start their own small business have almost no experience in managing a company. It’s common practice for business owners, especially new ones, to conduct research and consult with experts on how to run a business. This endeavor will give you great insight so you are able to anticipate unwanted events that could send your company spiraling out of control, and to allow you to build a contingency plan to get things back on track. There will, however, always be time-robbers and inefficiencies in your staff or workforce that will incur drawbacks and get your business a few calls from disappointed clients or customers.
Inefficiency is Bad for Business
According to Cliff Gilley from Quora, if Amazon’s website went down even for just one minute, it would lose $116,000 in revenue within that minute alone. It may not seem like much for a company that makes roughly $100 billion a year, but a hit is still a hit! Your small business, albeit new, will experience similar profit losses over the course of time – whether your website goes down or you are unable to conduct proper transactions with customers. The most tragic thing about company inefficiencies is that the customers affected will probably leave your business and choose a different company in the industry to work with.
There may not be a definitive guide on how to run a small business successfully, but maybe you can start with these four steps below:
1. Review Organizational Workflow
When your car has problems, you take it to the mechanic and have it checked on every bolt, nut, valve and other areas to find the root of the problem, so you can drive it safely again on the road. The same is true for your small business where you root out the problem by reviewing the organizational workflow to see where things get sticky and impede business operations. The best way to do that is to pretend that you’re a customer! Start by calling your company from a payphone or an unregistered number and place an order, then see how long it takes for them to respond and deliver.
Once you establish how long it takes your people to respond and deliver an order to a customer – and if you find it takes longer than it should – then you can commence an internal investigation. Go through each step of the process and find the weakest link in your system. Again, you will start with the customer service agents taking calls for customer’s orders, then to the department that processes those orders, all the way to the courier that ships out the product. If the weakest link in the chain is inside your company, then come up with more efficient ways to improve it, or replace people who are responsible for the delays, if necessary. People who waste your time and your business’ time are not ideal to keep in the workplace.
You want to tweak your business operations and get them to acceptable levels with a competitive edge in order to retain your loyal customers in the long run. An unhappy customer can instantly switch companies, and a customer lost can be the result of a business in peril. Develop creative ways to enforce customer retention; loyal customers not only buy more often from you than new ones, they also buy in larger quantities, too! If the courier is the problem, then find a better service or delivery person to get your products into customer hands on time. You can also use web tools that will help you run your business better – like Google Drive, Evernote, Expensify, and many other that you can find with a simple Google or App search.
2. Reward Performance
Some of your employees are hardworking and eager to please but, more than that, they’re actually brilliant problem solvers. So, each time they are able to figure out ways to streamline the process, sit down with them and offer to have them make a detailed presentation of their plans. Of course, reward great ideas with bonuses, promotions, competitive compensation, and other motivating offers. Money is a very good motivator when it comes to employee morale, so don’t be stingy when you know your employees deserve rewards.
Other types of rewards could include additional vacation time, including extensive travel perks like a paid stay at a five-star hotel, or tuition monies for individuals and their families. Larger items, investments, vehicles and more are all additional options to improve morale. If an employee is happy with the way that he or she is treated, then you can bet that they will work even harder and remain loyal to your company, and help ensure your business continues to grow.
3. Outsource for Efficiency
Outsourcing jobs is the trend these days, especially since the internet makes it so convenient to do so. There was, in fact, a man who once worked for Verizon that outsourced his job to a Chinese firm and only paid them 1/5th of his six figure salary while he was doing absolutely nothing at his desk! Unfortunately, this was against company rules and the man was fired soon thereafter; however, the point remains that, if you have too much to do and you’ll lose more money than what you earn, then it is best to let someone else do it for you.
You can use Upwork or People Per Hour to hire freelancers who can help with email marketing or run the back-end operations of your company for less than $7 an hour. Skilled freelancers fiercely fight for competition to get the job you’re offering, so you can even bargain for a much lower price per hour. That way, if you were making $300 an hour, then you could outsource the other jobs in your company so you could buy back precious time for yourself and use that to relax, exercise, or do some self-reflection and meditation to calm your mind.
4. Create Metrics and Review Monthly
You also need to monitor the progress, or lack thereof, in your business. When it comes to numbers and figures, your business, just like any other, is quantifiable. Therefore, it is necessary for you to create metrics and set goals, preferably each month, in order to find out if you’re succeeding. The monthly metric scores will tell you whether or not some of the guidelines and small business practices that you have implemented are working for your organization. It will also allow you to make updates in order to get the perfect recipe for a successful small business operation.
For instance, you want to increase your monthly sales output for the next quarter of the fiscal year by, say, 7%; then the metrics that you ought to set should include:
- The number of sales that your sales agents were able to achieve.
- The volume of each sale.
- The money spent to manufacture a product.
- The money spent on marketing.
- How effective your sales pitch was.
- How much time was used to convince a customer to buy.
- How this quarter’s sales compared to the previous quarters.
The results from these metrics should be reviewed and be used to contribute to case studies for future reference and initiate changes in sales tactics. If you are able to earn more than your profit margin consistently, then that means that the metrics you’ve implemented are working as they should be and you should continue on a similar path until something shakes up the market. At that point, switch strategies again and change a few things in your metrics, in order to adapt to new trends.
Other Things to Consider
You may also want to consider having a daily ten-minute standing meeting to review how you’ve done for the day and how you plan to make improvements for the next day. In a standing meeting, nobody is allowed to sit down – the idea being that, when people are relaxed in their chairs, they waste more time compared to when the meeting setup has a sense of urgency. Less time utilized means more goals achieved.
With the exception of your customer service department, everyone should be encouraged to do one thing at a time, since latest research shows our minds lose focus when we multi-task. A distracted employee is an unproductive worker and is not good for your plans relating to business efficiency.
Promote a culture of open communication and encourage your employees to communicate openly. You might never know that one employee has a great idea if they are afraid to speak up, and you don’t want to miss the opportunity to enhance your business workflow by not hearing from them.
Ensure that payments and other tasks are automated, which is easier than having another department handle payroll, especially since making calculations on employees’ salary, benefits, and other compensation takes time. There are more advanced web apps that now allow you to make payroll even easier.
Perform an inventory at least every quarter to assess the strengths and weaknesses of your small business and put plans in place to improve on them.
With these steps, you should be able to have a good handle on your small business and choose what direction you will take to improve the efficiency of your operations. It is advised that you find even more ways to help run your company smoothly. Remember, the market is constantly changing and you need to adapt quickly in order to survive. With new trends that come along, you will need to calibrate your methods to make your business more efficient.