Do you need to uncover the disadvantage dollar in your business?
Most business owners are not aware of the places their businesses are ‘leaking’ money. Sometimes real, sometimes in other forms such as lost or missed opportunities, inefficient use of time and other resources and ongoing frustrations that seem constant.
More often than not, these frustrations are dismissed with a shrug as ‘just a part of running a business’. Until the day you decide to measure what it is actually costing you. Better sooner rather than later.
The good news is that once you look into these you can generally uncover the cause, and the higher the cost to you or the business, the sooner you want to address it.
In almost every case of when a business is leaking money, it will be because of a missing system.
So, what is your disadvantage dollar? It’s the money your business is missing out on through all sorts of channels and avenues. Sometimes it’s things that are costing your business money. I’m going to give you three examples. One is about staff time and approach to work, one is about missed quotes (missed business), and one is about mistakes made too often that are causing stress or overtime on the part of the owner and causing him/her to miss out on things like valuable family time. (I will share the first example with you this week and the second and third next week.)
In each case, the business owner really wasn’t paying too much heed to the issue, thinking that either it was too minor to mention, or simply a fact of running a business and it was unsolvable. And in each case, when they sat down and measured, or quantified it, and put a dollar amount against the frustration, they got a shock. Which then caused them to move the issue right up to the top of the tree to the top priority to be addressed. These are all examples brought to me by real life clients who I’m happy to say have now solved these problems.
The first one was from a builder whose frustration was that his team was taking too long on breaks. The breaks were sort of sneaking over each time and it seemed too trivial to bring up. We sat down and looked at it and broke it down.
So, there were five guys on the site and each break was going about 15 minutes over, twice a day. We worked that out and over a day it was 150 minutes, which is 2.5 hours. Multiply that by 5 days a week = 12.5 hours a week, 52 weeks a year = 650 hours, or 16 1/4 weeks. Ouch! At an average site wage, that was about 13.5 thousand.
Even in one week, 12.5 hours in a week would have made a difference to the job they were working on. Plus, jobs would be completed faster and allow the team to get on to other jobs. He was missing out on dollars there too. He didn’t even include the missed opportunity cost. All he costed was what it was costing him…those extra minutes…15 minutes per person per break twice a day.
Just imagine what a difference of 12.5 hours of work a week (a day and a half) would have made to the business’s efficiency and profitability. Imagine how much time that would have taken off the build. A day and a half, a week, taken off the build would have been quite significant, or that 13.5 thousand would have gone a long way to putting on an apprentice over that time, which in turn would have led to greater productivity. Greater productivity would have led to greater profitability, happy client, happy builder.
Needless to say, we looked at how that was to be addressed and it was addressed in a way that really pleased and suited everyone with a very happy outcome.
Join me next week when I share the second and third examples of businesses I’ve worked with to uncover their disadvantage dollar.
Until then….
P.S. Learn more about working ON your business–talk to the coach! Click here to connect with me!