If you can measure it, you can manage it!
Most small business operators are lazy about keeping records to help them improve their business. They’d say they are too busy.
If you provide services, you need good time recording to measure your performance.
It’s very onerous keeping time records, but if you’re prepared to do it well, it will add thousands of dollars to your profit. You must keep a record of ALL the hours you are at work for the day – 7.30am to 5.30pm is 10 hours. Account for 10 hours.
You will find it easy to change, if you wish to. Your problem will be to keep going month after month. You’ll also find, after a few months, time recording and analysing will have become a habit and it will be easier to sustain it.
Measure what you do every day and if you have staff working for you get them to do the same. Analyse this information. Calculate the amount of time you put into work you can’t charge for (non productive time), like going to the bank, social calls, ducking out to get X etc. Analyse this and work out how to reduce it.
For example, use emails more, cut social chat during work hours and reduce the time you spend looking at work you never even quote for. You will get a shock when you see how much time you lose every week.
Occasionally, as a matter of interest, calculate the value of time for one week you spend doing work you can’t charge. Multiply by 52 and you’ve got a measure of what your non-chargeable time is costing you, every year, in terms of lost opportunity to be doing work you could be paid for. Aim to halve it.
You can also analyse your chargeable (productive) work. The best way is to look at the extremes. Work out the cost (in hours) of each job. Look at the ones which have taken you far too long. Work out how you could have done them better. Maybe you did more work than quoted and could charge for extras. Learn from the mistakes. Look at the jobs which have been very successful and see if you can learn from them, too. Disregard the majority in the middle, where the time quoted and the time taken were reasonably close.
Time spent working on your business as opposed to in your business is an investment. Most of us have our heads down working hard to get the work done and find it difficult to put time aside to make the business more profitable. If you can control your business like this, you will be a winner.
“If you can measure it, you can manage it” applies just as much to other aspects of your business. Sales are a good example.
Do you count up the number of enquiries you get from your advertisements? How do you know whether you are spending your money wisely, if you don’t? Do you measure the number of enquiries you convert to sales? What’s your success rate? A retailer keeps a record of each assistant’s sales, totalling them monthly. In this way, he helps his staff to improve their techniques.
Increase your profits by measuring what you do and managing yourself – and staff if you have any.
If you would like to discuss more about this article please contact Mark Pfeifer or Paul Dawson.