Time to Plan Your Strategies for Maximizing Profits in the New Year
Small business owners: the New Year is approaching, and with that comes the opportunity for changes in how you choose to run your business. With that, here are 5 ideas for New Year’s business resolutions:
1) Improve Time Management Skills
For many small businesses, wasted time can be the number one reason your profits aren’t as high as they could be. Less time wasted = more time spent on things essential to the operation. One way to see a major increase in productivity is to lay out a schedule that has times assigned to different tasks you need to accomplish rather than laying out a simple “to-do” list. This will keep you on track, and allow you to keep both yourself, and your employees, more accountable. Small business owners who stick to a plan have the greatest potential of achieving their goals in the shortest possible amount of time. Also considering designating specific times to check and answer email: When you’re constantly getting pulled away from the task at hand, it takes extra time to regain focus.
2) Maximize How You’re Using Technology
In this technology driven world, there are many useful programs and devices that can increase efficiency, and therefore profits. There are programs to assist with your books (QuickBooks, Freshbooks), backup your data, (Mozy, Carbonite), and even automate timekeeping (Harvest, Kronos) -- all available to small business! In fact, The Boston Consulting Group found that small and medium sized businesses that invest in modern technology increase their annual rate of revenue growth by 15% as compared to companies who place less emphasis on utilizing technology (http://www.bcg.com/media/PressReleaseDetails.aspx?id=tcm:12-146193) Technological solutions can provide great advantages, but beware. TOO many different programs can make a process convoluted, so make sure to keep things streamlined and employees well trained.
3) Set Up Systems and Processes
As a small business, there are processes your firm may not go through as often as a larger corporation might, such writing a proposal for a prospective client or hiring a new employee. Because of this, performing such tasks may be less efficient due since a well-defined process has not been established. For tasks such as these, spending an hour or two laying out a guideline (paperwork that needs to be done, email and timekeeping setup, orientation, etc.) can save a ton of time in the future, instead of requiring you to reinvent the wheel every time. Research indicates that every hour spent planning and preparing prevents 3 to 4 hours of wasted time, time that could be better spent on core functions or refreshing yourself with some well earned personal time.
4) Measure Your Results
Having a good handle on your results can lead to higher profits, and easier business decisions, since things that get measured can be improved. Make sure you document things such as expenses surrounding a given project, the results of marketing attempts, and even how long it takes employees to complete specific tasks. Knowing that your recent ad campaign brought in x amount of customers, or that a certain task now takes half as long due to experience, can help your goal setting and planning for the future! Talk to your bookkeeper about how to set up your accounting software to track the profitability of certain jobs or compare your actual revenues and expenses to pre-determined budgets.
5) Don’t Try to Do it All Yourself
Although small business owners often pride themselves on being able to do it all, you have to consider the opportunity cost of trying to learn things outside your area(s) of expertise. If an outside contractor can get a task done in half the time, free of errors, due to their experience, the extra cost may be worth it in terms of actual results. SMB owners would benefit from examining their core competencies and determining what activities are best done themselves and what tasks should be outsourced to an expert. Keep key activities that define your business, such developing and maintaining customer relationships, but delegate duties and processes that take away from the time you could be spending on activities only you can do.
Renee Melville is the founder of Sharp Point, Inc., a bookkeeping and accounting firm that specializes in helping small businesses and restaurants save time and money through better processes and improved business strategies.