There are lots of ways you can organize, operate and deliver value as a business. You can be an independent online business, an Amazon seller, a cooperatively owned farm, a brick and mortar restaurant, or a residential cleaning company to name a few. If you can identify a problem and offer a solution that people are willing and able to pay for, you have yourself a business. Even though businesses come in all shapes and sizes, for all the different problem-seekers and solution-offerers that exist there is something that connects them all.
That common thread that ties all of these business together is the drive to produce the best quality product, service, or experience using as few resources for as much profit as possible.
That was a mouthful.
Yes sustainability, honoring mission, and providing value are also big drivers for business but to keep operating, on average, it takes bringing dollars in the door. Then using those dollars in the best way you possibly can to continue to bring the next dollars through the door.
This post is going to provide you with some tools to help make sure you are being as efficient as possible.
Start by segmenting each department or operational area of your business into projects. Boil everything down to the most basic functions in the business. Making something simple but not simpler should be reminiscent of methodically putting together your childhood science fair projects or at least putting together IKEA furniture (way more fun than the furniture though). The term we use to describe this process is Project Management. Project Management is all about planning, organizing, monitoring, and allocating resources to successfully complete a specific outcome.
Operationally, most businesses are made up of lots of projects – some short term and some long term. Take this process and adjust it so that it best works for you – here is your crash course in project management.
1. Start with the cash flow. More specifically where cash is going and how it is being used in your business. Some easy ways to bring these costs down are to re-evaluate your shipping costs, credit card processing and insurance or liability needs.
2. Manage your businesses schedule. One of the biggest drains on resources and reason businesses hemorrhage money is over-staffing. If you are a one person operation, audit your time hour by hour to see where you get the most return on your time. If you have employees it means possibly trimming those hours. Are you paying the right people to do the right job?
3. Plan how your product or service goes from client engagement to final delivery and map out all the costs and tasks along the way.
If this is feeling a little overwhelming try breaking down each department or group of related activities and treat them like individual projects. Then find the goal of each project by asking:
1. Does this department or group of activities have specific or measurable goals? What are they?
2. Does this department (now project) contain all the related tasks to reach those goals?
3. Is there a clear start and end point in the process?
4.Is this so important or different that it needs to remain a standalone project? If not where can I combine these activities to be more efficient?
Now you have your project defined and it’s time to set it up. Here is a format to help you define what you need within each component of your business. It’s called the Triple Constraint:
1. Time Constraint: When does the outcome need to occur or is required?
2. Budget Constraint: What funds or resources are available to get the desired outcome?
3. Performance Criteria: Are there any barriers or quality issues related to producing the outcome.
For each project set up charts to track progress and measure from week to week, month to month and quarter to quarter.
Here is a personal example –
Sometimes, I hate doing the administrative work associated with running my consulting business. I wish I could just spend my days talking to people and lecturing to my students. But, invoices need to be sent out. So I have set up some constraints for the A/R or Invoicing Project in my business. This will ensure that I utilize my resources as efficiently as possible. For my time constraint I block off a chunk of time on Monday’s biweekly to go over and review invoices that need to be sent out. I physically and mentally limit myself to 1.5 hours maximum in dealing with this. If it needs to take longer I’ll pick another favorable time and do it then. My time, like yours, is important and after 1.5 hours I probably need to be somewhere else.
Budget Constraints are interesting for me. I tend to be a softy when it comes to invoicing and each week give myself an allowance for discounting. That’s part of the budget as well as the monthly fee I pay for Freshbooks, my invoicing and financial management service. Freshbooks is where I keep a good chunk of my client invoicing and billing information and is something I highly recommend to everyone.
That leaves me with quantifying and measuring performance. For my invoicing project this gives me the opportunity to see my billable hours or any other client services and measure them against the past. I can see how many invoice related communications are sent, follow up with old invoices as well as send out new ones. It also gives me the opportunity to review for errors or test new tactics to try to get my invoices paid faster and more accurately.
A real life fumble on my part was leaving the wrong mailing address on my invoice and losing out on a client’s payment for over a quarter – that’s how long it took for the Post Office to get the client's letter back to them. Quality of information and process is super important – otherwise you end up like I did and carry an opportunity cost on receiving that late payment.
Now it’s your turn. Start small and try to build momentum by breaking down one of the things you need to get done in your business into a single project. It’s not going to be perfect but taking the time to break down what really needs to get done, how to measure success and how to build systems around the stuff that you can. Taking the time to do this work will also help you get out of your own way so that you can do more of the work that matters to you and to your business.