The Importance of Business Processes For Meaningful and Efficient Growth
By William Lee and John Rabil
Business operations isn’t just about telling workers what to do or micromanaging the day-to-day tasks involved with running a business. At some point all successful businesses have an owner, owners or management team that gets out of the day-to-day grind. This allows them to focus on the bigger picture and set up processes that will allow a business to run efficiently, smoothly and in a cost-effective manner.
Many businesses, including those that generate a significant amount of revenue, have poor, or no, operations management and a lack of processes in place. This could cost the company thousands, hundreds of thousands, or even millions of dollars and will eventually catch up to them. Market research indicates that businesses lose 20-30 percent of revenue each year to inefficiencies.
Many businesses face the same problems when it comes to effectively handling operations. One, they don’t have anyone with company-wide operation experience, and two they don’t have the resources to staff a full-time operations position. Hiring a COO or operations manager who can set up company-wide processes can be very costly. At Workspin we’ve noticed that many businesses have a gap that prevents them from becoming the business they want to be. They don’t have an overall picture of what operational processes and efficiencies they need, and how to implement them over the entire organization to become more effective and profitable.
Here are some areas where a lack of business processes can have a major impact on businesses.
Talent is extremely important to businesses, and in this case “human resources” means much more than a department (or more likely, a person) who handles paperwork for new hires, fires and maintains records. Companies need to be able to recruit, interview, onboard and integrate workers into the business as quickly as possible. Inefficiencies around that can compound to create a significant waste of both time and money. A business needs to be able to quickly evaluate employees, address issues, reward successes and motivate its people to work together, as a team, towards one goal – that’s managing human resources.
Most businesses don’t consider the holistic view, and end up with employees who aren’t a fit, or aren’t satisfied with their job. Businesses can streamline the majority of these tasks by setting up processes that are followed every time a new employee needs to be brought on. While every employee is unique, much of what is involved with finding them, qualifying them and bringing them on is a repeatable process. Setting that up as such will save time, money and significantly limit some of the risk involved. At Workspin we’ve helped clients understand how their team needs to work together, set up processes for certain roles and positions, decrease inefficiencies and overlapping job functions and implement options to make sure the business is getting the right type of talent and utilizing that towards big picture business goals.
Almost every business is in the customer services business at some level. Whether it’s a B2B or B2C business, customers and clients are involved at some stage. Keeping them happy is vital to keeping the doors open. Strange then that so many businesses would neglect to set up some process or system that handles customer service, complaints, or issues. Studies suggest that poor customer service costs businesses more than $75 billion a year, and additionally, focusing on customer services is any easy wat to limit some potential legal liabilities. One area Workspin has successfully helped clients is by looking at ways to become more customer-centric in terms of how products and services are offered, which has a direct impact on increasing revenue. More than two thirds of customers in the marketplace are now “serial switchers,” meaning they switch brands, services or solutions because of a poor customer experience. Why not spend some time creating a process for handling customer service, save some money and create brand loyalty?
What’s a silo? It when one department, division, or even person has its own, unique operations setup, system or platform. It need not involve technology. It could simply be that the standard operating procedures of one department don’t mesh with the standard operating procedures of another. Silos create bottlenecks, waste time and make routine tedious tasks time consuming. How efficient can a company be when one department uses a file management system that’s completely different than another department that also needs to access the same files? This isn’t strictly a problem for large businesses that have full on “departments.” Many very successful small and mid-sized businesses have numerous departments, even if they are departments of one, or one person is many departments. Look for inconsistencies across company departments in terms of resources, policies and procedures. Find a way to standardize them to create more time and money. Set up a process for making sure everyone who needs to can easily access information and share information.
Financial Analysis, Reporting and Review
Finances intimidate most businesses owners. It’s typically not their area of expertise and they neglect setting up a way to manage finances when starting out because it’s not a priority. The problem is, if a business doesn’t take some time to get a handle on its finances, sooner rather than later, then they are going to have some issues they may not be able to correct. Not to mention, they aren’t going to have a grasp on what resources are available and how to allocate them towards achieving the company’s strategic goals. Setting up financial management process doesn’t need to be an overly complicated undertaking. There are numerous online services that can track revenue, expenses and produce financial reports. The important thing is to set up a process where revenue and expenses are regularly tracked, reports are regularly generated (profit and loss statements and balance sheets for example) and reviewed and then used to drive business decisions. Again, it doesn’t need to be a burdensome task. Once a month reconcile your accounts, review the reports, make adjustments as needed (maybe you need to cut some expenses where you can) and then review the company goals and see what capital you have to allocate towards moving in the right direction. That may not sound like much of a process per se, but it is, and it’s an important one. Workspin helps companies set up these types of systems so they can safely scale, strategically plan, source resources and manage risks.
Business processes are vital to the long-term success of any company. Without them you aren’t going to be able to scale, operate efficiently and maintain profitability. There is no one size fits all in terms of what process a business needs, or how to set them up, figure out what’s important and how a process can be built around that.