Website Logo
Website Logo
9 March 2021
Management Control Systems

UNLEASH YOUR PROFIT POTENTIAL

Where is the Hidden Opportunity in Your Business?

There’s a saying that ‘What you Don’t know Won’t Hurt You’.  In business however, what you don’t know could be significantly impacting your profit potential.   When working with business owners, Alluxi’s key focus is to illuminate hidden opportunity in your business – stripping away layers of inefficiency and misconception, to highlight and exploit your true productivity potential that can translate into greater profitability.

 

As a first step, the Alluxi Launchpad Workshop, including a free Alluxi Business Success Scorecard, provides a taster of the Alluxi toolbox and techniques. In a short half day workshop, we do a deep dive into the detail of your business.  It doesn’t take long to expose where greater productivity can be achieved, and how to maximise the profit potential for your business.

 

In this month’s blog I’m bringing live examples that turns on its head the belief that ‘What you don’t know won’t hurt you’. From SME’s in three different industries, these short case studies demonstrate how looking at things from the perspective of a productivity expert, quickly uncovered additional profit potential – which may not otherwise have come to light had we not had the discussion.

 

Covid Restrictions Unexpectedly Created Greater Efficiency

 

As much as the pandemic is causing chaos for most businesses, for the care company I’ve been consulting to over the last 2 years, a compliance requirement from the Care Quality Commission (CQC) unexpectedly boosted this dynamic organisation towards greater productivity.

 

Providing domiciliary care, the business was required to minimise the number of individual carers visiting vulnerable clients, to reduce the potential spread of the virus.  Some clients receive up to 4 visits a day between dawn and dusk, each requiring different services and skills from their pool of resources.

 

With over 100 staff in the field on any one day, some without transport reducing the geographical range they can cover, the logistics can be complex.  Adding the extra parameter of minimizing the number of people visiting any one client into that mix, those logistics become even more problematic. 

 

Initially I was asked whether a spreadsheet could be created to coordinate, manipulate and manage the different combinations, postcodes, and visit types through pivot tables.  As I already had a broad understanding of their planning software, I suggested we review the possibilities of using the tools already available to them, rather than re-invent the wheel using a clunky, fragile and potentially corruptible spreadsheet.

 

A short Zoom call, brainstorming the functionality of the software with the MD, Registered Manager and one of the Coordinators, resulted in a list of queries the registered manager could approach their software support company with.  Within 2 days of setting up “clusters” on the system for specific postcode areas, a pilot was carried out in one small geographical zone.  This quickly achieved the desired results of reducing the number of different carers attending each client, reducing the COVID risk, and the concept was successfully rolled out company wide. 

 

Now, the upshot of adapting the working practices to comply with regulatory requirements, even though it’s only been functioning for three months, has provided new insights and benefits from a commercial perspective.

 

Because the system has been set up to schedule care visits in much smaller geographical zones, the travel time and mileage costs are significantly reducing.  Additionally, as volumes grow, the time now freed up can be optimised to schedule in more clients.  Carers are paid per visit so this will boost their income and the business can offer their existing team more hours each week as demand grows. 

 

From a less tangible perspective, there are the longer term benefits of reducing recruitment and training time. Clients receive a more consistent service, and probably build a better relationship with their carer.  The team enjoy enhanced job satisfaction as they, in turn, get to know their clients better too, as well as the opportunity to increase their earnings if they wish.

 

Overall, it’s a three way win – for the clients, the staff AND the business.

 

Productivity vs Creativity

 

Behind the technical development work, web design involves a large degree of creativity, and the perception exists that maintaining productivity levels stifles creativity.   Working with the Directors & Project Managers of a thriving web agency, the surface issues highlighted that projects were running over budget, eroding the profits.

 

The Project Managers were spending too much of their working day updating and manipulating spreadsheets to try and keep on top of scheduling the outstanding work.   Although their existing software had extensive project task lists and the amount of work remaining to be completed was visible, estimates of how much budgeted time was still required to finish the job were not visible.  The project management was task focused, but not time managed.

 

This lack of reporting systems or logging time, meant information was not readily available to monitor how much time was spent on each project.  Individual projects could not be managed to ensure they achieved the required profit margin.  It was also not possible to tell whether sufficient jobs were completed in a week or over the months, to recover the overhead costs of running the business, until the financial reporting was completed a couple of weeks after each month end.  By that time it was too late to act, and address the inefficiencies.

 

As our work evolved, and their understanding grew of how productivity directly affects profitability, the Directors quickly recognised it would be a key measurement needed in the business.  They would need to track and monitor the time spent on the design, development and launch of the web packages, as well as the management and administration time involved in delivering the projects.

 

Despite our best efforts to establish productivity measures by asking the team to log in to projects on the company software being tested at the time, the software simply didn’t have the capability to provide meaningful productivity measurement reports.  We had to either revert to manual tracking and reporting mechanisms or look for a different software.

 

As manual tracking would add, rather than detract from, the already overburdened administrative tasks, the business owners took the bull by the horns and did their research.  Having only implemented a new software package the previous year, they took the brave decision to adopt a completely new software, that would deliver the productivity reporting, and start over again.

 

This has paid dividends (no pun intended), with information now being available to report on the levels of resource dedicated to the projects, compared against budget.  The team can be better managed to focus on what’s behind schedule, where too much time has started to accrue on individual projects, or where more projects can now be started as the work is being finished more productively. 

 

Additionally, as the time logs begin to provide more meaningful information as to how long each part of the project is actually taking (rather than estimating), this can be fed back into the budgetting for more accurate quotations in similar projects, for future quotations.

 

The company has the luxury of using this reporting and the data to decide whether to increase the profit margins by maintaining their pricing structure but using less resource, so achieve higher margins, OR maintain their current profit margins, and pass on the productivity improvement to the client, making themselves more competitive in the market.

 

The important point here is that had they not known the detail of how much time the programmed tasks would take, they would not have had the facts and figures to drive and inform their strategy decisions.

 

Hidden Figures

 

A prospect of mine, launching a radical new Accounting practice, approached me to deliver the Alluxi Launchpad workshop.  The business owner is hugely ambitious, and determined to bring accounting into the twenty first century.

 

Despite having a robust strategy document, there was no financial road map to match sales volumes or financial forecasting, and stress test whether the business would be profitable in the first year or two of trading.

 

In a few short hours, through the Launchpad Workshop, we created three foundation tools to focus and galvanise the business owner into action over the coming months.

 

  1. A working business growth plan was delivered which the Director can update with real time information to immediately see the future impact of sales volume growth and resource costs on profitability.

 

  1. A resource requirement plan will automatically calculate, based on the forecast sales volumes

a) Whether the existing resource in the business has reached its maximum capacity, and

b) how much additional resource will be needed at specific points in time, so it can be planned and recruited in advance

 

  1. The workshop also provided an overview of the management systems and potential key performance indicators to drive the business forward to ensure profit margins will be maintained.

 

Getting the numbers and calculations out of the owners head and into a working spreadsheet immediately highlighted that the proposed forecast sales volumes versus the costs and expenses, would not produce the desired income and profit margin.  But by reworking the numbers and seeing the impact on the gross profit, the Business Growth plan crystallised exactly what would be required to achieve the results they wanted, and a future crisis has been averted.

 

What you Don’t Know Won’t Hurt You

 

In summary, these three examples demonstrate how, through opening up to fresh ways of looking at your business models, or how your operations are managed, your business can take a few simple steps in a different direction and your profits will grow as a direct consequence.

 

As business owners, we’re not always well versed in the art of running and managing a business.  This is the key downfall of many startups, where the business owner is an expert in the product or service they deliver, but needs specialist expertise to translate your business from the kitchen table, scale it up to a profitable enterprise through the path of least resistance.

 

Reach out if you feel there’s latent potential in your business, but you’re just not sure how to harness it.

 

YOUR NEXT STEPS TO GREATER PRODUCTIVITY IN 2021

 

Looking ahead into 2021, Alluxi is here to offer you support through these times of change, bringing a facts and figures approach to evolve your business and realise your goals.

 

As a first step towards identifying your current business challenges and evaluating where your future opportunities exist within your business, we invite you to complete the Alluxi Business Success Scorecard. Take 15 minutes to respond to the scorecard and see how your business scores in 10 key areas.  You’ll be invited to book a follow-up Productivity to Profit Breakthrough Session to discuss the results in more detail, and identify how you can implement rapid and measurable improvements.

 

Click here to take the Alluxi Business Success Scorecard now