Look beyond the numbers for business success
By James Murchison - Director at Murchisons
A drop in numbers requires a closer examination of a number of factors within your business. By understanding what is and isn’t driving profit and the outcomes you’re seeking to achieve, troublesome areas can be fine-tuned.
As a medium-sized business, it’s not uncommon to observe volatility in numbers throughout the years. Some years you may exceed your targets, during others you may break even or even suffer a loss, which will leave you wondering where things went wrong.
When faced with this dilemma, we ask our clients to compare a good year with a bad year considering a variety of factors aside from straight number crunching.
Identifying the ‘lead indicators’ during periods of loss or stagnation should be your first point of call e.g. inadequate staff resourcing, low productivity and competitor performance. Although the relationship between these factors is not necessarily straightforward, identifying the activities which will help you best achieve your targets and quantifying them with meaningful data allows you to design a business strategy which proactively responds to change to create outcomes.
For example, something as seemingly minor as clashes in annual leave could potentially impact your business performance and ultimately the bottom line. It thus becomes a matter of carefully examining your staffing levels and managing holiday requests to ensure that you are not understaffed during your most critical times of the year. Identifying any trends in output and comparing this with staff movements may help you understand when you are most vulnerable. You might have to formalise procedures by introducing minimum timeframes for staff leave requests, or consider using temping services (if appropriate) to help minimise any productivity losses suffered by inadequate staffing levels. Of course there will be occasions where this isn’t always possible, but by planning ahead you can respond to the unexpected more effectively.
Another potential threat to a dip in numbers is the ever-changing nature of business skills. Conduct regular skills audits where you identify skills that are either currently in the business or those that absolutely need to be in the business, then find or train staff that fit these. This also helps in the recruiting process too, for instance in our industry if you have people that are very good on tax and you lose such people, then you know you need to replace these positions with someone equally as specialized as opposed to a ‘generalist’. Similarly, if you looking to expand your business in a particular area, then you need to increase your capability otherwise you risk swamping existing employees and reducing your ability to nurture ongoing growth. One of our clients told us that they win work and then are flat out delivering this work due to the correct resources not being in place. This will result in a “boom/bust” cycle. If your forte is winning work through upfront ideas, resource the doing of the work with equal importance. Even if it appropriate to hire staff on a contractual basis then this is what needs to be done to fill that big hole.
If you'd like professional and tailored advice for your own business, please give us a call on 02 9959 5599