Inefficiencies in business processes can cause a loss of revenue, employee fatigue, and customer frustration. Running your business efficiently requires having GOOD processes in place. As we wrap up the year, take stock of your operation. Are there areas that could use improvement? Let’s make 2024 the year you sharpen your processes and improve all areas of your business.
What are business processes?
A process is a series of repeated tasks that a business uses to accomplish a goal. Below is a simplified customer service procedure as an example of a process:
A potential customer has reached out for service during off hours and leaves a voicemail.
- The client service representative (CSR) receives the message and by order of the company’s Standard Operating Procedure (SOP) must call the potential client back that day and log the call into the Customer Relationship Management (CSR) system.
- When the potential customer is reached, the CSR offers and secures open dates/times for the service to take place.
- The date/time chosen is entered into the CRM along with the customer’s full name, phone number, address, and email address.
- The CSR reviews the appointment calendar daily and calls customers the day prior to their appointment as a courtesy reminder.
The above process is simple, effective, and delivers great customer service through detailed information gathering. Having an SOP that documents the procedure, streamlines training efforts. On top of that, it limits potential inefficiencies such as appointment no-shows.
Hopefully, this example has you thinking of areas in your business that would benefit from an inefficiency review, including sales, human resources, financial, customer service, and beyond.
The Importance of Business Processes
If every area of your business has a defined and documented process, you are off to a great start. If not, you may notice more ups and downs during your workday. Business processes eliminate unnecessary tasks and costs, increase productivity and customer satisfaction, and keep your employees happy by minimizing stress.
Identify and improve inefficient business processes
Some common signs that indicate a need for process improvement include high staff turnover, regular miscommunications, and slowed productivity. Other factors that cause slowdowns are out-of-date technology, difficulties finding information, or extensive time spent on tedious tasks.
As the small business owner, you’re likely the head of all departments. As such, be open-minded and ask yourself what will help the business become more effective. Be diligent in your quest to uncover problem areas and identify solutions.
- High-Staff Turnover – Is there a particular position you struggle to keep filled? Ask yourself if the workload is reasonable or if inefficiencies in business operations could be to blame. Employees who struggle through the workday without processes may become stressed out. If left in that scenario long enough, they may leave. Considering that losing an employee can cost a company one-half to two times the employee’s salary, it’s in your business’s best interest to invest in processes.
- Slowed Productivity – This may indicate a process that needs to be simplified or documented. If staff members are unclear on expectations, they will fill in the blanks. If staff members handle a task differently, this could trickle down to inconsistent customer/client experience.
- Out-of-date Tech – Knowing when to upgrade technology is a common problem with small businesses that run lean to improve profit margins. Not upgrading though could frustrate your employees who are at the suffering end of slow or spotty technology. Hiring an IT professional to assist when needed, updating drivers, and regularly searching for current versions of the software you use, could improve the situation. Keep in mind that old technology eats up time, which in turn affects your bottom line.
- Tedious Tasks – Tedious or repetitive manual tasks can seriously fatigue employees. If these activities take up much of their day, research and secure free or reasonably priced automation software tools to streamline the work.
- Information Black Hole – When employees struggle to find the information they need to complete their tasks, this can slow workflow. It could mean departments are working independently from one another and have their own method for storing information. To break down the silos, create a method for storing and sharing needed information such as a CRM system and/or shared drives.
To fully scope out inefficiencies, talk with your employees. They are your key stakeholders who do the day-to-day business tasks and likely have already identified issues and ways to improve your processes. Listen to, address, and offer solutions to their pain points. Identify problem areas, discuss solutions, and make changes.
Document and Test Your New Processes
As the business owner in charge of overseeing all functions of your operation, you may assume that some tasks are obvious to employees. That may not be the case. It is best to break down and document all tasks to ensure they are completed in the same manner across teams, keeping the process efficient and outcomes consistent. A well-informed and well-trained team that follows your documented business processes keeps customers happy and helps your business grow.
SOPs help with training new employees and lessen the amount of time your current staff spends getting the new person up to speed. It also gives new employees information to refer to until the process becomes second nature.
Measure the Improvements
Take note of your company’s starting point before you implement changes. Get a baseline for customer purchases or your revenue stream. Track existing work timelines. Once you document your processes, revisit that baseline to see how your measures improve.
Inefficiencies Lead to Revenue Lost
To summarize, inefficient business processes can lead directly to revenue loss for your business. Make a time commitment to review how tasks are completed and develop a system to manage them effectively. This effort will take some time but, when complete, will put you in a better position to strategize plans for innovation and future growth.