risk

The Unexplored Risk of Doing Nothing

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It’s fascinating to see how many business owners are unwilling to spend the time and money necessary to straighten out their business processes and align their systems so that their back office runs more efficiently and effectively. It’s especially confusing when the end result would most certainly mean the business will become sustainable, scalable and, best of all, sellable. 

From what I’m observing, it’s just not on their list of priorities. It isn’t top of mind. 

Instead, they make-do with the way things are turning a deaf ear to their employee’s complaints, putting up with continuous chaos, and rolling along as if everything is okay. As long a certain KPI’s are in check, the Bookkeeper isn’t issuing alerts, the Office Manager isn’t freaking out and the business owner’s lifestyle is intact, everything is fine.  

Their choice (by default) is to do nothing. But, what’s the risk of taking that position?  

In order to figure that out, we need to look at the typical elements (just touching the surface here) of a typical back office operation. See how many of these issues sound familiar:

  • Inefficiency – time wasted/money spent:
    • continuous mistakes resulting in rework
    • doing more work than necessary
    • duplication of effort
    • repetitive breaks in the process flow that go unattended
    • undocumented procedures, inadequate systems resulting in inconsistent work products
    • important information dropped/lost
    • embezzlement
    • duplicate or unnecessarily large inventory orders
    • customer delays and complaints
    • business owner and staff constantly in reactive mode
    • multiple single-purpose systems that don’t interface
  • Desertion – time wasted /money spent/revenue lost
    • disintegrating customer relations that lead to lost revenue
    • dissatisfied employees leave requiring time & money in recruiting efforts
    • imbalanced work load while finding a replacement
    • time and money incurred for onboarding and training new employees
    • undocumented knowledge that leaves with the departing employees
  • Dissention – time wasted /money spent
    • unstated leadership expectations resulting in confusion and disruption among the ranks
    • daily disputes
    • staff resentment toward each other
    • bad employee/manager relations
    • gossip, open hostility, acting out
  • Absenteeism – time wasted /money spent
    • disengaged, under-valued employees abusing time-off privileges
    • burnout, stress and low morale
    • imbalanced workload and reduced productivity with other staff
    • safety issues from rushing to get the work done
    • wages paid with no productivity to show for it
  • Under-productivity – time wasted /money spent/revenue lost
    • unclear objectives and a chaotic work environment enabling under-performers
    • imbalanced workload for all staff
    • low morale overall
    • reduced quality of work
    • missed deadlines
    • loss of revenue
  • Stagnation – the business can’t possibly be Sustainable, Scalable or Sellable

A list like that is enough to give anyone the whim-whams. I suspect business owners are aware (on the periphery) that these issues exist but it seems that the pain hasn’t become significant enough for them to do anything about it. Unfortunately, business pain, which can take any number of catastrophic forms, has a nasty habit of showing up at the worst possible time. Unexplored risk.

So, maybe business owners would pay more attention if there were hard dollars attached. In its most simplistic form, it’s just a multiplication.

You know your numbers so, fill them in and do the math. For each one of the issues on the list above, or others if you come up with them, calculate:

Salaries in hourly terms (for everyone involved) x hours spent on the issue = $$$$$ wasted

When you think about the time spent, don’t forget to take into consideration all of the conversations you have with the employee(s) involved, the conversations you have with the line manager(s), the staff meetings you hold on the topic, the time spent with recruiters, in interviewing, the selection process, in onboarding, on training, on re-training, on coaching, and in redoing the work.

So, let’s say you decide to hire a consultant to help you get your back office in order. Let’s also say that it takes somewhere around 100 hours, give or take, spanning a period of 2-4 months at an hourly rate of $100.   

Now let’s look at where you’ll be on the other side of it.

✓ Procedures are clearly documented and followed to the letter every day

✓ Procedures are online and integral to the daily flow 

✓ Process flows are working smoothly, bottlenecks resolved and duplicated effort is eliminated

✓ Staff is consistently accountable for what they do

✓ You receive regular reports assuring you the business is being run the way you want it to be run

✓ Operational issues are brought to you as solutions, not problems

✓ Dissention is diminished because your expectations are clear

✓ Under-performers have no choice but to improve or be dismissed

✓ The staff is operating as a cohesive unit

✓ Daily process-related decisions, which were once solely in your domain, have been redistributed to the staff

✓ The staff contributes ideas for process improvement

✓ Any breaks in the process are easily remedied by the staff who make the appropriate adjustment to the procedures, eliminating recurrence, and keeping you informed

✓ The staff has clear job descriptions

✓ Each employee has performance goals that are reviewed quarterly or semi-annually

✓ Absenteeism is under control

✓ Customer deadlines are routinely met, complaints are manageable

✓ You’re preparing to bring on more business and the staff is ready to absorb more work

✓ New employees are easily onboarded and come up to speed quickly and accurately

✓ Employees are cross trained where appropriate and can easily cover for each other when necessary

✓ You aren’t in danger of one person leaving unexpectedly with key process knowledge locked in their head

This improved scenario is absolutely achievable by investing in the strengthening of your back office. The beauty is that you do it ONCE and then just maintain the new paradigm. Easy.

What will you do with the money you will save when these issues are resolved? Invest, build your retirement, buy another business, create a new product line, expand?

Investing in strengthening your back office will absolutely shift the culture of your business. Your staff will take on the responsibility for running the day to day because they’re not only clear that it’s their job but they now feel like an integral part of something bigger than themselves. They’re a part of the engine that is running and building your business.

You’ll have more quality time to do the strategic thinking you need and want to do for your business. You will have taken your leadership skills to the next level.

If you’re beginning to see the value of this kind of investment, I highly recommend that you reach out for support. It will not take as long as you think to implement and the expense will be a fraction of what it will cost if you do nothing. The risks you face will be known and you’ll be far better prepared to handle any new issues that arise.

If you know of a business owner who needs to read this article, please pass it along to them. And, if you like this article, I would really appreciate it if you would leave a comment in the space below.

As Your Project Planner, I specialize in documenting procedures, training staff, and aligning systems so your business runs profitably without you.

Please do visit www.yourprojectplanner.com and sign up for a 30-minute introductory consultation.

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Carolyne Simi
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Professional Project Planner

"Your Project Planner" provides Project Management, Standard Operating Procedures and Process Re-engineering for small and medium-sized businesses who don’t have the time and staff to get their infrastructure synchronized with their business model so they can scale to the level they've envisioned.

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