Why Job Management and Workflow Management is Key to a Successful and Fun Business

 

Every business has only three core elements:

  1. Find work or customers
  2. Perform work or make products
  3. Administration

 

It’s obvious, then, that the management of the performance of the work or the making of the product is key to the financial performance of your business.

 

And yet, this aspect of running a business is all too often neglected.

 

Why is that?

 

I believe there are two reasons for this:

 

  1. Most entrepreneurs are, first and foremost, technicians

A technician’s mindset often starts and ends with the quality of the job. There is no doubt that the quality of the job is extremely important however, job or product quality is only one aspect of the second core element mentioned above.

 

  1. Many businesses start very small

When a business starts in this way, there is little need for job management. The owner can be confident that the work is getting done properly, will personally know where every job is at and the business’ fixed costs are low enough that an inefficient job management system doesn’t adversely affect the performance of the business at that size.

 

The Importance of Job Management

Regardless of the type of business, job management affects almost all of the key metrics of a successful business, including:

  • Gross Margin / Profit
  • Profitability
  • Cashflow
  • Customer Satisfaction
  • Employee Satisfaction
  • Business Valuation

 

Gross Margin

Gross margin is calculated as the sale price less the direct costs associated with that sale. The more efficient the business’ job management, the less wastage the business experiences in both labour (time) and materials which in turn reduces the costs associated with completing the job or product. This in turn increasing the gross margin of the business.

 

Profitability

As the gross margin of the business increases, so too does the overall profitability of the business.

 

Cashflow

Cashflow is affected in two ways. Obviously, the higher a business’ profits, the better the eventual cashflow of that business. In addition, though, the faster a job or product can be completed, the quicker it can be invoiced or sold and, provided the customer pays on time, the faster the funds hit the bank account.

 

Customer Satisfaction

An efficient job management system ensures the quality and timeliness of the job and, if things go wrong, an effective customer communication system, all essential to the satisfaction of the customer. This in turn has the flow-on effect of better reviews, more referrals, quicker payment and fewer complaints which are all important to the financial success of the business.

 

Employee Satisfaction

Employees enjoy working within a system or a structure where what is expected of them is well communicated and systems are in place to enable them to meet those expectations. Further, a business where customer complaints are low because service and quality levels are high is a much happier place to work for the employees of the business.

 

Business Valuation

A business which is fully systemised and can operate without significant input from the owner is a much more valuable business than one which is fully reliant on the owner doing and overseeing everything.

 

There are three essentials to efficient job management:

  • Having the right people doing the right jobs within the business;
  • Systemising the business so that there is only one right way to do things; and
  • Implementing a reporting mechanism to determine whether or not the business’ job management is efficient.

 

 

The right people doing the right job

The goal of efficient job management is to have the lowest cost person doing any particular task within the business, whilst maintaining quality.

 

This rarely happens in small and medium-sized businesses where the business owner or higher-level employees spend a significant part of their week doing lower-level work.

 

This practice can significantly affect the profitability of the business by making the team too top-heavy, increasing wage costs. It can also lead to a struggle to find quality staff who want to do what they’re qualified to do rather than work which should be delegated.

 

Business Systems

Many small businesses have as many ways of doing things as there are people in the business. This is because everyone has their own way of doing things.

 

When a business is very small (i.e. one or two people) this way of doing things won’t cause much harm, however, as the business grows, this can have catastrophic effects on the success of the business because:

  • Work quality will begin to suffer
  • Customer service breaks down
  • Customer experience is not consistent
  • Work cannot be easily monitored
  • Employees (i.e. especially support staff) get frustrated

 

The way to overcome this issue is to have the “one way that we do it here” via a systemised approach.

 

These systems can take the form of:

  • Equipment and/or software which automate certain parts of the job
  • Templates and/or standard documents
  • Written procedures and processes
  • Video procedures and processes
  • Policies regarding how work gets performed

 

Job Management Reporting System

Without a strong job management reporting system, it is virtually impossible for a business to know if its job processes are efficient.

 

It is often not until the end of the year that many small businesses find out that there is something seriously wrong inside their business.

 

Have you ever found yourself in a situation where you have significantly increased your turnover but made significantly less profit?

 

This is very often due to poor job efficiency and, importantly, poor job management reporting which could have alerted you to this issue much sooner.

 

How is your job efficiency and job management reporting?

You need to be all over your numbers in relating to your job management. Don’t guess. If someone asks you how much margin you make on your work, you should be able to tell them……..exactly. “About xx%” is not good enough.

 

Monitor your results consistently and often to determine if you are achieving the expected margin on work.  This can be as specific as determining the exact profit on jobs over a certain revenue figure or the exact margin on a particular line of products in any given month.

 

If profitability or margin is not what was expected, look into why and work on fixing the issue as soon as possible.  The numbers don’t lie so believe them and act on the story that they are telling you.

 

If you do not have this information at your figure tips, invest in software which will provide you this information and make it the backbone of your job management reporting system.

Want more go here https://www.exceedia.com.au/contact/

It will be the best investment in your business you ever make.

Craig