Why Systems, Structures & Reporting Should Be Your New BFF This Year
Did you know that in the US and Canada, less than 4% of all companies ever cross the $10 million in revenue line and keep going?
If you want to stop hitting that ceiling and then recovering again, only to hit it again next year, read this post and implement the solutions.
Letâ€™s put this problem in perspective. If your business is earning north of $5 million in revenue, you and your team (you have one right?) are doing a lot of things right and your customers are rewarding you for it. So well done, acknowledge your accomplishments. Then take a deep breathe and be ready for change if you want more.
Here are the top 3 reasons itâ€™s hard to break $10 million in revenue without breaking your business, your employees and your stress levels.
- Structure Means Roles Lack of clarity about roles, responsibility, and authority mean you canâ€™t hold people accountable. You think they all know their jobs but that doesnâ€™t mean your company is operating on all cylinders so you can all depend on each other.
- Systems Means Workflow This lack of clarity means your workflow across your departments is most likely on life support and needs a massive overhaul. People stop trusting each other when they canâ€™t get the information they need. And they canâ€™t get it because â€¦ [enter the long list of complaints and finger pointing].
- Reporting Means Financial Data for Dashboards No one is able to make timely decisions if they donâ€™t have accurate data about what is happening today internally and externally. How many of everything did you sell, to whom, when, how? Did you make money on that sale or lose? Did you make more or less than the last sale, the last week, last year? Why? By how much? Have you put your prices up effectively to cover increasing costs, but also need for working capital? When you canâ€™t answer these questions until your financial statements come out three months after year end, you donâ€™t know what causes problems and you canâ€™t fix the problems as they are happening.
Lack in any or all these areas makes growth challenging, stressful and expensive. You make the wrong decisions at the wrong time and then react to the results with more ineffective decisions.
A business without these insights is painful to manage. You can cut the tension with a knife when you walk in the door.
Where do you find your new BFFs?
Step 1 â€“ Reporting â€“ Financial Dashboards
This is a project we do together with owners, its not a job for the bookkeeper, your accountant or the controller. We start by designing your dashboard. What do you need to know in order to make the daily, weekly and monthly decisions that will drive performance. This is a discussion that helps you see your business through new lenses. We want to find the products that drive repeat business. We want to determine where you have pricing power and where you can drive traffic to increase growth.
Our discussion helps you determine what you want to know. Then we look at your costs and divide them into categories that will deliver that data to your dashboard. If you donâ€™t have a way to collect that data (Spotty detail on those time sheets? No one keeps track of who walks in the door or why?) then we design a system and change management plan to get buy in and support from your staff to supply the data.
Then we work with your accounting team to re-assign costs to new categories. We may need to upgrade your accounting system so you can produce such reports. You may want to integrate accounting with a CRM tool. You may also want to start setting budgets and forecasts. It all depends on your type of business and how big you want your business to be. And how much insight you really need to make smart, in the moment decisions.
Does all this take time? Yes. Is growing your business without losing money, people, and your health worth it? Then investing in dashboards is too.
Step 2 â€“ Systems â€“ Workflow
What is workflow? Itâ€™s a map of how stuff gets handled inside your company so the promise you make to the customer is delivered as promised. Itâ€™s the information and data that has to be captured from start to finish to enable that promise. Itâ€™s having all the information you need when you need it so you can get your part of the job done. Its being able to see where every step in the system is in terms of progress so you can manage the exceptions and let the system automatically do the rest. Its how you hold people accountable. It allows for you to trust that your employees have the resources they need to do what they need to do at the level of authority they need so you donâ€™t have a line up of people at your door requesting (demanding?) your decisions and conflict resolution skills.
When we work with companies, and listen to the problems, many of the complaints we hear stem from workflow problems like these. The complaints can be about work projects or about people â€˜who should haveâ€™ and didnâ€™t. Blame makes a business toxic. That starts the exodus. People leave when these problems canâ€™t be fixed. How do you fix it? We establish a safe environment to air the complaints in a way that everyone can hear them without fear of embarrassment, retaliation and defensiveness. Then we turn the complaints into solutions by working with an identified team in your business. Then everyone who contributed to the complaints helps refine the new workflow map. Then we implement as a pilot project, iron out any defects and then implement company wide.
Is it worth it? Generally weâ€™ve found that during and after the process people are relieved to be working on this thorn in their sides. People are far happier. Systems are productive again. Everyone can keep their promises again which means you get repeat business and attract star performers.
Step 3 â€“ Structure â€“ Roles
This last step is done as part of the workflow analysis. It becomes clear when you map out the new workflow where some people are overloaded, where you have square pegs in round holes and and others are being used in effectively. By creating the right roles for the right reasons, you stop hiring based on personality and move people into roles that play to their strengths. Then you can assess what level of authority each role needs to execute their responsibilities. A new organization structure emerges that is scalable for growth. You also now know who needs more training, what needs to be automated, how many more skillsets you need and when you need them.
Is it worth it? If you identify the right roles, right people, and right performance expectations then you can measure and evaluate. You achieve a team that can self-manage, is self-responsible and knows what to do to deliver on the promises made by your products and sales people. This equation always yields growth.