Wouldn’t it be amazing if an entrepreneur or business owner already knew how to avoid setbacks and operational failures in their company? Reduced costs, increased productivity, and profit maximization—these are the things business owners and CEOs dream of, but many can’t quite figure out how to get there.
Before we can get to the part about how you can fix these issues, you need to identify the problems you face right now. Some of the key reasons for business failure include poor marketing, bad business planning, lack of finance, ineffective management, and lack of clear objectives.
Take Borders for example, the once-renowned bookseller that after 20+ years of success had to eventually file for bankruptcy. A bunch of different factors led to this, starting with Borders’ acquisition by Kmart in 1992. The first setback was when Borders lost many of its original top executives, who deeply loved and understood the world of books. The publishing industry is a niche area that’s beloved by its customers (book lovers and bibliophiles) and involves several nuances unique to it that Kmart, a supermarket, wasn’t aware of. Moreover, Borders was late to the digital era, while its competitor Barnes and Noble already went online much earlier. If that wasn’t enough, Borders made more strategic errors by moving into the CDs and DVDs space while consumers were moving onto e-readers. Following its acquisition by Kmart, Borders was not only late to the game, but also drained the company of millions of dollars due to several strategic errors and operational inefficiency.
This leads us to a crucial topic for any business: operational efficiency. Operational efficiency deals with the operation of systems, specifically, the difference between outputs and inputs. To be in a good place, your revenue should be higher than the costs, so you make profit in your business. While your specific business may require a customized plan or solution, here are five quick ways to help review and improve your operational efficiency:
- Eliminate wastage. The first place you have to look is within your company, Where can you save money and where do your wastages lie? Once you figure this out, you can quickly eliminate wastages and save up! Wastages can include excess inventory due to overproduction, unutilized talent, spending in the wrong areas without understanding your customer’s needs, and more. While the figures gone into wastages may seem small considering the revenue you’re trying to make, trust us, the little things add up. Once you cut out the wastages, you’ll be surprised at the huge difference it makes in your business. Sometimes, it might be hard to find places to cut back on because you may be too close to your business. This is where an outside consultant like Evolve can come in and identify areas for improvement in your company.
- Provide incentives to employees. Before its acquisition by Kmart, Borders was actually quite successful. Founded by two brothers in Michigan, Borders represented every book lover and reader’s haven. The people who worked there were passionate about what they did and understood the trends of the industry, which significantly contributed to the company’s success. When your employees are driven, they’re motivated to perform their best. Provide incentives to get them invested in your company’s success and perform really well because their success translates into your company’s success.
- Resource planning. Resource planning is especially important to small businesses as it keeps things under check. Basically, by keeping track of when and how long you need a resource, like talent, along with what they’re working on, you’re most likely to manage your project well and ensure its completion and success. Planning ahead and tracking the project on an ongoing basis will save you a lot of trouble in the long run and set you up for success.
- Outsource work for reduced cost. While this purely depends on the nature of your business, instead of having a full team on staff for each service or department, you could outsource a portion of the work to save costs. For example, working with a company that provides marketing services for a monthly retainer over hiring your own team would save your thousands of dollars, including benefits. There are many companies like Evolve Business Advisory that offer admin support and a full-service marketing team for a fraction of the cost of hiring your own resources to help small businesses find their footing and succeed.
- Review your customer acquisition cost. Sometimes, businesses spend too much on customer acquisition but see low returns. It’s either because they’re spending in the wrong avenue or aren’t organized with their marketing efforts. First thing you should do is invest in customer retention; having a loyal customer database will keep your business stable. Next, try to boost the conversion rates, if you’re spending on digital marketing. Make use of avenues like email newsletters, social media, and public relations which involve little to low cost, but the chances of returns are higher. Invest in a marketing automation software, but only if it makes sense for the task and improves efficiency.
These are really just a few tips to get you started, but depending on where your business is at, we can definitely provide relevant hands-on strategies and tactics that you can implement within your company. Like what you read? Subscribe to keep up with our articles–we’ll be providing tips to help businesses Change, Transform,and Grow. By the way, if your business is in a unique situation and you’re looking for customized advice, we’re happy to help! Reach out to Evolve Business Advisory for a free consultation today and let’s see what we can do to help you increase your revenue.