There are various things that eat into your profits, various things that corrode and waste the very profits you’ve worked so tirelessly to generate. Things such as overstocking lines that won’t sell out, purchasing in the wrong parts of the season therefore reducing your potential sales, poor overhead management, lack of sales vs. overheads, buying high and selling low with slim margins, the weather (I hate that one – but businesses use it as a ‘reason for lack of profit’), time of year, flawed business model and bad luck. So many factors come together working against you to stop you making a buck or two at the end of the year. But none of these hit you as hard as TIME.
Time is your profit; if your time and your staff’s time is mismanaged then you are constantly paying money out for something that isn’t delivering. Time can be your friend, if your staff are utilised to their full potential then time can be your greatest asset. It’s common knowledge that people are the only driving force to the engine that is our global economy, without people we would have no ability to generate revenue, to train other staff, to serve customers, to build buildings, to credit control, to come up with new ideas, to invent products and so much more (I’m sure to grasp my point). So with this in mind people can single-handedly make your business a giant success but unfortunately it goes both ways with these things and they can single-handedly strangle the most successful of businesses.
I believe the key comes down to one thing, time. Even the most difficult of staff can be utilised to the greater good of any business but the chain is as strong as its weakest links and this needs to be address. People cost you money, people are assets to a business and each needs to produce something of value to be in your employ. If they don’t, like anything else, if something doesn’t produce an output above its cost then you have to shift the deadwood. Don’t misunderstand the value of a member of staff could be that they save time for others, or build a brand for you (marketers are the life of your business – once your established, that’s a different article but a note that your sales staff should have a basis understanding of marketing, this will help them make you a lot more money).
How much time is wasted in your organisation? Have you got members of staff with time to waste? If so it’s time you made some changes, give them some extra jobs that free up revenue generating staff, give them projects that will make the whole company more efficient and more than anything make sure they are being utilised to their full potential. It’s critical you understand your staff’s skill-set, don’t assume anything about them, underestimate staff can be just as damaging as overestimate staff. Overestimating people ability can lead to ‘over promotion’ and inevitably leading to large errors costing you both time and money but on the flip side ‘under promotion’ is just as damaging because this can lead to frustrated people who could be doing so much more for your organisation and possibly make you more money and save you time. (Also as a side note, if you have sales staff doing too much admin then you are costing yourself profoundly, cut the admin and let me focus purely on sales – that’s a critical note).
This I’m afraid is not basic stuff, you will find this problem infesting every level in every large global company in the world. Don’t be afraid to tackle this none-the-less because if you employ less than 50 staff you probably can’t afford to have any weak links, can you?
A simple sum to make this work for you is the following:
Staff member costs = hr rate (for this example we will say £10 per hr),
Staff value = hr rate x8, Total value per hr = £80
Value – based on how much it costs you if they don’t do their job.
The value differs from role to role and industry to industry however the principle remains exactly the same. Each hour wasted cost you so much more than their hourly wage, every hour utilised produces so much more than you need.
So in summary to this, don’t let time kill your profits and don’t waste time in doing something about it!