You built your business with a vision in mind. You defined objectives and goals and have grown your company to achieve these. Sometimes it can feel as if money and income growth and business growth do not go hand in hand, and business owners can be left scratching their heads, wondering where they went wrong.
This article discusses how you can discover areas where your company is losing money due to inefficiency, neglect, or internal obstacles.
Perform a business assessment
There are many factors in a company that causes losses. Assessing your business and discovering these areas is vital to supporting sustained growth.
However, the most common question in any business assessment is, “Where do I start?”
At Business Success Consulting Group, we encourage company owners to begin any improvements by starting with their problem area. Most commonly, the departments that give business owners trouble are sales or product delivery.
Here is how to first identify which area is giving the most trouble:
1. Look at the measurables and metrics
How do you discover which departments are failing to meet business expectations? The answer is: by looking at the hard data.
Are your customer service complaints through the roof? Then there is something wrong with production or product/service delivery.
Has no one contacted your sales team in months? Then your marketing isn’t working.
When you are in the thick of it, the problem area is difficult to pinpoint. So, take a step back and look at your company as a whole. You will be able to identify problem areas based on hard data.
2. Look back at the past several months
Take a look at your own actions or the actions of your management team in the last several months. Did you or your team have to step into a specific branch of your company to bail it out more than once? Have you been investing time, resources, and money in a particular area, but getting little to no ROI?
You and your managers should be running the company overall. If you have to step into an area to do an employee’s job, there is a problem.
It could be that there is an entire job within a department that is unassigned and needs to be filled. It could be that someone in the department needs training or doesn’t understand all of their duties. It may be that the function of a department has never been clearly defined. It could be that each person in the department is doing things in his or her own way.
Identifying the specific issue can happen once you have identified the problem area.
3. Consider ROI
Some business owners go about saving money by slashing budgets. This doesn’t always work and can actually harm the business. Instead, it’s vital to spend money wisely – where it is needed – and avoid waste.
One way to discover an area that is causing waste is to evaluate the ROI for each department. This is also a great way to see if one area is extremely successful or even picking up a failing department’s slack.
4. Look for discrepancies
It can be challenging for an employee or manager to report that something is wrong in their area. If you are getting an “all is well here” report, but the measurables don’t match or you seem to be pouring money into the area with little ROI, something is wrong. It’s time to dig into the area and discover what’s going on.
The above business inefficiencies are losing you money, clients, and future business.
The first step is to find the inefficiencies and pinpoint where they come from precisely.
Other areas that can contain money-losing inefficiencies
Sometimes a company can seem well-established, with each department doing the job as laid out. However, there are still areas where opportunities, money, and customers are falling through the cracks.
As you examine your business for departmental inefficiency, consider the following factors as well:
- Business flow. How do customers and products move from one department to another?
- Management. Do you have an overstaffed leadership board and only a few employees who work with customers or create your business product? Do you need to hire more people who can complete deliverables or thin out the top of your business? Conversely, you only have one top-level manager when you need a team?
- Systems. Do you have systems in place so that all customers have the same experience?
- Training. Are your employees trained in existing processes and procedures? Do your employees know their jobs inside and out?
While you have likely considered materials costs, delivery costs, and more physical aspects of your business – you may not have fully dug into the internal systems to ensure complete company efficiency.
That’s what we are here for! Contact Business Success Consulting Group today, to begin your initial business evaluation.