The Fractional COO’s Guide: Uncovering Inefficiencies in Small Business Processes

As a small business owner, you’re likely striving to improve your business processes. Uncovering inefficiencies in small business processes is critical. Are you looking to increase customer satisfaction? Or perhaps you are just looking to save time and be more efficient? Identifying opportunities for process improvement is critical, but it’s also challenging.

According to Deloitte, “organizations that invest in process improvement initiatives often see a return on investment of 10 to 20 times the cost of the initiative.” Improving business processes can have a significant impact on a company’s profitability. Small business owners achieve their goals by identifying and addressing process inefficiencies.

This 6-step guide will help identify process inefficiencies in small business operations.

How to start uncovering inefficiencies in small business processes

Step 1: Create a list of all the core processes for your business

The first step in uncovering hidden inefficiencies is to create a list of all core processes. You can start at a top level, such as with a Department or main function. Once you have the top level defined, you can start listing the tasks and sub-processes. Think about it from your customers point of view. From the moment a customer interacts with your business until the time they pay their bill. Every one of those touch points is a part of a process. Once you identify the core processes and tasks, start documenting them. You don’t need to create a 1,000 page manual, but list out the main steps that it takes to deliver in each of these areas.

Step 2: Identify and document potential inefficiencies or redundancies in each process

Once you have the list of core processes, start to look for inefficiencies in each area. Are there unnecessary steps? Too many handoffs between different people or teams? Perhaps there is a bottleneck that slows everyone down?

If you want to maximize the impact, involve your employees in the process. The people who do the work every day are best at identifying inefficiencies. Business owners may be frustrated at this — if they are the ones with the answers, why don’t they share them? Usually this is because nobody has ever asked. Employees are often stretched thin and don’t have time to think about how to make things better. Ask them about what would make their jobs easier and you will be surprised at what they have to say. This approach drives employee engagement and can help get buy-in when it comes time to change.

Step 3: Check current tools and technology for potential upgrades

There are an endless number of tools and technologies to streamline business operations. Check the tools you use and determine if any upgrades or improvements can be made. Are you using the software to it’s full potential? Is this the right tool for the job? You wouldn’t want to pound a nail with a screwdriver — perhaps your CRM is not the best solution to manage projects…

Step 4: Establish metrics to measure the effectiveness of the current processes

How efficient are your business processes? You should establish metrics to measure process effectiveness. According to HubSpot, “companies that track metrics for their content marketing efforts are 17 times more likely to see a return on investment.” Some common process metrics include cycle time, error rates, and productivity. You may even look at the number of handoffs from one department to another. Measuring your process will help you identify opportunities for continuous improvement.

Step 5: Compare metrics to industry benchmarks

Once you establish your metrics, compare them to industry benchmarks to see how you stack up. Benchmarking your performance you can save time and money in your small business. You can identify areas where you need to improve so you can be more competitive. You can also develop strategies to further differentiate from your competitors. This can increase customer satisfaction and strengthen your small business’s market position. How do you find the comparisons? There are many different methods and sources, and it’s often helpful to work with an expert. Working with a Fractional COO or another trusted resource can help you navigate.

Step 6: Develop action plans to optimize efficiency in small business processes

You documented your core processes and identified inefficiencies — congrats. Now it’s time to develop action plans to optimize efficiency. This may include streamlining processes, automating tasks, or even outsourcing certain functions. It’s tempting to try to fix everything at once, but avoid that trap. Put together a priority list of improvements. How much does this process or step cost you? What is the impact on my team or customers when it goes wrong? Are there consistent “fires” in a particular area that you would like to extinguish once and for all? These are a few of the questions you can ask to focus on. It’s not always this simple though, as you also have to consider the resources required to change. Will this require a big investment in time or money? Will this pull me away from another initiative that is already in progress? Consider the consequences of your decisions and priorities.

Continuous Improvement

Uncovering Inefficiencies in Small Business Processes is not a one-time event. The most scalable companies use continuous improvement to ensure processes are optimized. Consider implementing a continuous process improvement program. Commit to consistently looking for process inefficiencies. Conduct regular process reviews. Seek feedback from your employees on what can make their jobs better. There is a clear impact on your bottom line when you optimize small business processes.

Identifying inefficiencies in small business processes is challenging. Ensuring your business runs efficiently and effectively is critical. A National Small Business Association report found that 60% of small businesses that implement process improvements report increased revenue and profitability.

Learn more about process improvement ideas to boost your business’s efficiency.

The KPI Process Improvement Solution

Do you need help uncovering inefficiencies in small business processes? You may want to consider a Fractional COO.

A Fractional COO can provide the operational expertise needed to get results faster. Our team provides a fresh perspective on your business operations. We don’t tell you what to do, but also get hands-on to drive change. Schedule a free consultation with the Key Performance Integrators team today.

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