Fine-tuning your business

• Bernard Tanner
• 6 October 2009
• Page 1 of 2 : single page

Could the end of the global financial crisis be in sight? While it's still too early to make a call, there are some very promising signs.

Here's one you might have missed. Remember how it all started with a collapse in the US housing market, which then caused a chain reaction around the world? Well, existing US house prices surged by an amazing 7% in July, the fourth straight month of gains. While they're still 32% down from their 2006 peak, they're stabilising, along with the US employment market.

Sometime soon we're likely to see the same chain reaction, but in reverse. US demand will start to pull in more Chinese exports, which will boost China's already strong appetite for Australian resources. That will put billions of dollars more into our economy. Then things will really start to heat up.

Getting ready for the recovery

What does all of this mean for Australia's small business owners?

Firstly, you've almost made it through. Well done - there are plenty of bigger businesses that haven't.

But it's not over yet. The Reserve Bank still forecasts that unemployment will rise to around 7% before things improve, which could put a significant dent in consumer spending, with painful effects on your sales.

Research from the Commonwealth Bank and the Australian Chamber of Commerce and Industry shows that, as recently as June, more than 40% of businesses were expecting weaker conditions over the next 12 months.

That makes it the ideal time to fine-tune your business systems so you can be confident that you will keep going until the recovery arrives, then make the most of it when it does. In other words, it's time to start working on your business as well as in it.

Make every second count

Now, I realise what many of you are thinking - you know you need to work on your business, you just don't have the time. For small business owners, time is the most precious of all resources, and the scarcest. Which is why you need to spend it wisely.

The truth is, you can't afford not to spend time developing systems to make your business run more efficiently. (See ‘Five benefits of better systems'.)

By taking the knowledge and expertise that's currently locked up inside your head and transforming it into a system that others can follow, you multiply the productivity of your business and free up extra time that you can spend on the things that really matter.

Some people say you've got to spend money to make money, and the same is true of time: you've got to invest time to save time. Remember - whenever you simply do a job instead of writing down how to do it, you condemn yourself to doing it again.

How's your week looking?

Here's a simple exercise to show you what I mean.

Get out your diary, or print out next week's calendar from your email program. Keep it on your desk (or on your dashboard, if you're out and about). Every hour, jot down what you've done. Then at the end of the week, divide your activities into categories like these:

• Administration
• Client service
• Sales and marketing
• People management
• Accounts

Odds are you'll make some interesting discoveries. You might find that you're the world's most expensive secretary - which means you could buy yourself a whole lot of extra time each week for less than $20 an hour. Or you might find that you spend a lot of time telling your staff what to do. In that case, written systems could make all the difference.

Even if you're a sole trader, you should spot some activities that you could potentially outsource to someone else - or hand over to your first part-time employee.

Creating systems doesn't have to be hard - it doesn't even have to take up large amounts of your time. See ‘Five shortcuts to instant systems' for some easy examples.

The next step

While it's essential to document your current processes, that's only the first step. Once they're on paper, you're ready to start measuring their effectiveness. Then, if you discover they're not as effective as you would like, it's time to start work to improve them.

As an example, let's think about your sales process. It might describe how to find leads, make a sales call, prepare a presentation, then run that crucial meeting with the client. But until you start counting the number of leads you found, how you found them, and whether they were converted into sales, you'll never really know how well your process is working. So it's essential to build those measurements into your process.

Armed with that knowledge, you can start to make any necessary changes. For example, you could write two different scripts for sales calls, then measure which gets the best results. Or you could identify the most cost-effective channel for leads, then try and exploit it.

The trick is to keep innovating, then keep what works and discard what doesn't. That way, you can give your business the best chance of success, whatever the economic weather.

In addition, no matter what the economic climate and despite business performance, it is always important to be as alert as possible when running your business. Conducting a regular ‘health check' within the intricacies of your business, like the financial side of things, will help to ensure that the business is operating at optimum efficiency and identify any areas that need to be addressed.

Ultimately, this is a good way to gauge whether your business has the strength to withstand any further downturns in the wider economy.

Want to know more about how you can future-proof your business? Perhaps you'd like to fine-tune your business finances? Email your questions to askbernard@cba.com.au and I'd be more happy to help. I look forward to hearing from you.

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Five benefits of better systems

Systems don't just save you time. Here are some of the other ways they'll benefit your business:

1. Deliver reliably, every time. You have a great value proposition, but do you always live up to it? Great global businesses deliver the same product, with the same quality, all over the world, because they have a great system.
2. Solve the staffing challenge. We all know how hard it is to find great people - and how much they cost when you do find them. But when you have a system that anyone can follow, then you can hire people who are less experienced and less expensive. Often, you can deliver a better and more consistent service at the same time.
3. Stop knowledge walking out the door. When your business relies on the expertise of your staff instead of the quality of your systems, then you lose valuable intellectual property every time someone leaves. Wouldn't it be better if you could have them record that knowledge and leave it behind when they go?
4. Build something you can sell. In the long term, your aim is to turn your business into a valuable asset that you can eventually sell, creating real wealth for yourself and your family. But until your business can run without you, it's unlikely to be attractive to a buyer.
5. Create, measure, innovate. Documenting your systems is essential, but it's not the end of the journey. The next step is to measure their effectiveness, then think about ways to improve them.
   

Five shortcuts to instant systems

Here are some shortcuts to help you get there quicker: