Sales and profit are obvious factors that drive your financial performance as a business. But, if you have a leaky bucket, adding more water won’t get you very far. Therefore, you need to improve business performance to lower costs, create efficiency, and protect your profit margin, so you can continue growing your business with confidence.
Your Ultimate Guide to Small Business Money Management
Small business money management is probably not a phrase that gets you excited to jump out of bed every morning. But, your small business – and the dream it represents – won’t last long if you don’t buckle down and manage the heck out of it. This is your ultimate guide to small business money management, so you can stop avoiding this gross, uncomfortable topic and start growing your business with confidence.
Why You Need to Improve Business Performance 🐢
In business, financial health and operational health go hand in hand.
By continually finding ways to make your business leaner, meaner, and more efficient, you increase profit, reduce waste, and lower your costs.
Sounds good, right?
Today, maybe your business feels a bit out of control – like a cluttered room with piles of stuff that seem to grow every day.
You wouldn’t be alone there. As you grow your business, it’s normal for execution and the precision of good operations to wane.
Over time, though, this can impact profitability, increase your stress and workload, and even negatively affect the customer experience.
Side note: solid execution is, of course, an essential skill for all new small business owners – something you can learn more about in my workbook:
| WORKBOOK: How to Run a Business Successfully with These 3 Essential Entrepreneurial Skills
It’s time to clean house and get back on track – to fill the leaks in your bucket, learning how to reduce business expenses and how to make a business more efficient.
Well, the first step is to accept that it’s your responsibility to figure it out – not by scouring the web in search of answers.
Let go of the idea that you need to find, copy, and implement someone else’s answer in your own business.
Instead, recognize that you are creative and capable of refining your operations, uncovering ways to make your business more efficient over time – learning, sometimes the hard way, about what works and what doesn’t.
The name of the game is continuous improvement!
What is Continuous Improvement?
Continuous Improvement is a philosophy of, well, improving continuously. 😉
The idea is to never settle for the status quo, but to always look for ways to get better and improve business performance. It requires:
- Curiosity about the gaps or opportunities you find.
- Experimentation to adjust what you’re doing.
- A mindset that’s willing to accept progress over perfection.
| BY THE WAY: With 1:1 Coaching, these are all skills we can work on together.
This is all much easier to do if you have the proper Control Systems in place to monitor, measure, and improve what you’re doing.
| RELATED: How to Find the Keys to a Successful Business with these 8 Critical Steps
With these ideas in mind, here are two ways to make your business more efficient and improve business performance: Customer Lead Time and Workload.
Customer Lead Time
The time it takes to deliver on a customer’s order
Workload
The work relative to your capacity to sustain that work
Reflect on Your Operational Health Today 😅
As you learn about each metric, you’ll have an opportunity to pause and reflect on the health of your operations today, using a simple 4-point scale (4 being the strongest).
Keep in mind, there’s no “correct” answer.
It’s just an exercise to build some self-awareness and get you thinking.
It’s also not about being a “4” all the time. You’ll have moments that feel like 4s and moments that feel more like a 1.
And, you’re not alone there – for some aspects of my operations I feel like a 4, but I’m often a 3 or even a 2 on some days depending on the other priorities I’m juggling.
Fluctuating is normal and expected when you’re trying something new.
If you’re not happy with where you’re at today, pause to get curious:
- How could I make this more efficient?
- What would more consistent execution require?
- What experiments could you run to try and move the needle?
And, you might also need a quick business financial health check-up!
| FREE CHECKLIST: You Absolutely Need This Simple Business Financial Health Checklist
Remember, starting and growing a business is not a straight line – you should expect your operations to be the same.
Just try something, learn from the result, and commit to improving in your next attempt.
Improve Business Performance With Customer Lead Time ⏰
You can improve business performance and increase profit by examining your Customer Lead Time.
What is Customer Lead Time?
Customer lead time is the time between the initiation and completion of a customer’s order. Said simply: When did they place the order? When was it delivered? And, how long did it take in between?
How To Make A Business More Efficient With Customer Lead Time
In a world where Amazon and others can deliver in a few hours, customers have been trained to expect their orders to be filled quickly – or, at least, they need clear expectations about how long they have to wait.
Customer Lead Time is a great metric to improve customer satisfaction, but it’s also useful to improve your operational and financial performance.
Every new customer order represents an infusion of cash into your business.
That works in reverse too. Every open account or unfulfilled order is tying up the cash you need to grow the business.
Actions, experiments, and things to try next.
Create a process map of customer purchases. Grab a piece of paper and a pen and draw out the steps. What happens first? How does it end? What steps or actions need to be done to get there? Break big steps down into smaller steps. Then, monitor new purchases as they move through the process to identify where things tend to get held up. What kinks or bottlenecks can you find and eliminate?
Looking For Ways To Make Your Business More Efficient? Ask Questions Like…
- How long does it take for an order to be completed once it’s initiated? What expectations are you setting with your clients/customers?
- How efficient would you say your processes are? What, if any, specific steps in your processes just take too long and need to be re-examined?
Take a mini Self-Assessment…
What Does Customer Lead Time Look Like For You Today?
Consider the options below, then select the statement that best aligns with your reality. Tap or hover your cursor over each card to reveal more information.
4
My customer lead time reflects the hard work I’ve put in to make my processes as efficient as possible and my customers are satisfied with how quickly I’m able to deliver my products or services. I regularly examine those processes to see where I can gain even greater efficiency without sacrificing quality.
You’ve got this!
That’s great. Remember too, that every system eventually breaks down or gets interrupted. Continue to check-in with your processes, get regular maintenance on your tools if you have any, and do what’s needed to get ahead of problems.
3
My customer lead time is okay but not consistent. I don’t always manage my customers’ delivery expectations appropriately. I keep track of how long it’s taking, but I’m not sure what’s driving the variability.
You’re getting there!
Small steps add up. Start by drawing the existing process – make it visual. Then, keep a log of how long it takes to move through the process. Over time, you’ll start to get a sense of where you need to focus your attention.
2
My customer lead time varies and I’ve heard from some unhappy customers about it. I’m not consistently fulfilling orders in the same way and sometimes I work on newer orders before older ones.
You’ve got some work to do.
No worries, we all do. But, the sooner you straighten this out, the more cash you’ll have on-hand for other opportunities or investments. Make a map of all the ways you’ve fulfilled orders in the past. What works best?
1
I’m not currently keeping track of how long it takes me to fulfill a customer’s order, but I’d like to start.
You’re getting started.
It is okay to be exactly where you are. Be patient with yourself as you figure this whole thing out! And, great news, the 321 Liftoff blog is here to help you explore further!
Learning how to reduce business expenses and increase profit is an iterative process. You’ll need to experiment to uncover new ways to make your business more efficient.
Improve Business Performance With Workload 😵💫
Managing your Workload is another critical way to improve business performance and increase profit in your business.
What is Workload?
Workload is the amount of work that needs to be done. And, typically, it’s measured relative to your capacity to take on work. Said simply: is your work manageable or is it beyond what you can reasonably handle without burning out?
How To Make A Business More Efficient With Workload
Workload changes over time, but if it’s too high for too long, we can burn out quickly.
It can be especially challenging for solo-entrepreneurs to take breaks and find time to recharge their creative energy because they’re handling all aspects of the business.
Burnout has a simple and clear financial impact on the business: if you’re toast, who will run the business? Caring for self, therefore, is essential.
You can improve business performance by managing your stress and capacity, ensuring you are working at a sustainable pace.
Actions, experiments, and things to try next.
Determine your capacity. If you have a product-based business, how many units can you produce in a given timeframe? If you have a service-based business, how many hours do you actually have available to serve your customers? How many customers, clients, students, or orders can you reasonably handle and still have a fulfilling life outside of the business? This might require an honest examination of your calendar, conversations with family, and consideration of other obligations.
Looking For Ways To Make Your Business More Efficient? Ask Questions Like…
- How manageable is your workload on average? What limits do you set for yourself? How often are you fire-fighting vs. proactively solving problems? What’s your plan to rest and recharge?
- If you were to plot your workload over time, what peaks and valleys would you see? What accounts for that? What are you most curious about with this metric?
Take a mini Self-Assessment…
What does Workload look like for you today?
Consider the options below, then select the statement that best aligns with your reality. Tap or hover your cursor over each card to reveal more information.
4
My workload is high, but in an exciting way. I’m willing to put in the work and I know my limits. I regularly take breaks from my work to rest and recharge, so that I can continue to do my best work. I’ve done a lot of proactive work so that I can avoid last-minute fire-drills.
You’ve got this!
That’s great. Remember too, that business is rarely constant. You might be in a good place now, but that doesn’t mean you won’t have peaks and valleys in your workload at some point. Be sure to prepare for seasonal spikes in demand, for example.
3
My workload is not consistent given my fluctuating sales, but I’m still excited by the work. I take breaks, but I don’t always feel recharged and ready to get back to work. I occasionally have to stop what I’m doing to put out a fire.
You’re getting there!
You’ll boost your ability to navigate ambiguity with a clear head and a little inspiration. What sort of break would help you feel recharged? Working at a sustainable pace will ensure you’ve got the mindshare to run the business effectively.
2
My workload is high, but I don’t feel like I’m getting anywhere. I’m not taking time to recharge or rest because I’m hustling for the next sale. I spend the bulk of my time fire-fighting when things go wrong.
You’ve got some work to do.
No worries, we all do. Starting a business is not a straight line – it’s normal for there to be a little more fire-fighting in the beginning. What’s your real capacity per week? How much can you reasonably handle? Set limits on yourself where needed.
1
I have not taken the time to pause and reflect on how manageable my workload is or is not, but I’d like to start.
You’re getting started.
It is okay to be exactly where you are. Be patient with yourself as you figure this whole thing out! And, great news, the 321 Liftoff blog is here to help you explore further!
If you can learn to manage your Workload, you’ll improve business performance over time.
It’s not immediately intuitive, but the question of how to make a business more efficient, really does start with you. You need to learn to manage yourself.
Which is why, in my Small Business Money Management Email Course, you’ll learn how to tackle common financial growing pains and build resilience to deal with the stress and pressure of the experience.
| EMAIL COURSES: 4 Amazingly Simple Email Courses For Small Business Owners
It’s Time to Improve Business Performance – Start Here 🤓
As a business owner, you have a responsibility to improve business performance with every sale, every hour of operation, and every customer interaction.
That might sound daunting, but don’t think about improving the whole business at once.
Just examine small pieces at a time and commit to getting 1% better every day.
Be patient with yourself as you experiment and figure things out.
And, if you need help prioritizing, balancing your workload, and finding efficiency, consider scheduling a FREE Discovery Call with me to learn how working with a Small Business Coach might help you.
Take a moment to pause & reflect.
- Which of these metrics might be the most challenging for you? Why?
- What have you already tried to get your operations under control? What do you want to start, stop, or continue?
additional tools, links, & downloads.
Start here:
- READ: How to Find the Keys to a Successful Business with these 8 Critical Steps | 321 Liftoff blog
- WATCH: How burnout makes us less creative | TED
You might also like:
Make a commitment.
Hopefully, you’re leaving with several ideas of what to try next. So, take a moment to aim your effort.
- What’s one thing you’d like to do differently after reading this article?
- What commitment are you willing to make in service of your growth?
- How will you hold yourself accountable?
Questions, comments, or ideas for the blog? Sound off in the comments!
Join the conversation.
What experiments have you tried to improve business performance?
What ideas or questions does this spark for you? Share some of your reflections in the comments or send me a message.
Starting and growing a business is not a straight line.
It can feel messy – it zigs and zags, it starts and stops. It can feel frustrating even for the most seasoned business owners. And, that’s ok.
It’s also an exciting challenge. It’s going to stretch you. You’re going to learn a lot – not just about business, but about yourself.
And, that’s why it’s worth it.
TAKE THE SPIN OUT OF STARTUP 😵💫🤩
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