Efficiency improvements in administration and operations

One of the great things about being a small business consultant is that I get to help my clients see problems and challenges they didn’t even realize were there. Many of us have been working for such a long time with the same tools, the same habits and the same protocols that just having a fresh set of eyes come in and ask some simple questions can be very revealing.

A business owner I recently worked with had a number of challenges to tackle, including promotional materials, bookkeeping and web development. They primarily wanted an extra pair of (qualified) hands to help with the extra work that had been mounting in the previous months. But one thing they were not thinking about was increasing efficiency by reducing the total amount of work that needed to be done.

When I looked at their procedure for managing their mailing list, I realized it was a terribly cumbersome process. With a list of tens of thousands of addresses, every new mailing piece required several hours of labor to organize and sort through the list and eliminate duplicates that had been added since the previous mailing. When I inquired, my clients confirmed that this was indeed a laborious process, and they dreaded it whenever it came time to send out another mailing. Now there’s a needless restraint on promotion if I ever saw one. Since the list was constantly adding new subscribers, the problem could only get worse as time went on.

Using some Microsoft Excel tricks, I was able to streamline the whole “mailing list update” process, making it more accurate and less prone to human error, and reducing the total time for the task from several hours to several minutes. Now more mailing pieces could be sent out, on a more regular basis, and the company could be unafraid in pursuing new subscribers.

Efficiency improvements often come in unexpected places. Done well, they can save you money, time and sanity for very little sacrifice. Sometimes, as in the case of my client, there may be no downside at all, only upside.

Small firms with big ideas

See this video from Business Insider for a reality check on the recent Facebook and Twitter valuations. The interviewee warns that those valuations may be excessively high. Whatever your opinion on the topic in question, I see an important takeaway for small businesses: it all comes down to dollars and cents. Even if, unlike the speaker says, the valuations of these companies are spot on, he raises the important issue of style vs. substance in the world of business.

Countless small firms have great, profitable ideas, but it can be difficult to see that value in a realistic framework, especially if positive confirmation from the market and from investors has accrued in spades. The entire dot-com bubble was born out of this kind of disconnect between style and substance. Chances are your small business has real value, and so does the idea underlying it, but if that initial seed of potential isn't watered with the adequate attention to detail (i.e. the "boring" stuff like cutting costs or marketing), and a commitment to an objective reckoning with its limitations, it will never realize it. A small businessperson shouldn't allow anyone to know the limitations of his/her own firm better than them.

Small needs vs. Big experience: Bigger isn't always better

An interesting article recently by Ben Horowitz in Business Insider analyzes the challenges that can arise when small companies--especially creativity-hungry ones--bring in managers from larger organizations. Suffice it to say it doesn't always turn out as planned. Here are some quotes that jumped out at me:

In fact, most skilled big company executives will tell you that if you have more than 3 new initiatives in a quarter, you are trying to do too much. As a result, big company executives tend to be interrupt-driven.

In contrast, when you are a startup executive, nothing happens unless you make it happen. In the early days of a company, you have to take 8-10 new initiatives a day or the company will stand still. There is no inertia that’s putting the company in motion. Without massive input from you, the company will stay at rest.

And more:

When you run a large organization, you tend to become very good at tasks such as complex decision-making, prioritization, organizational design, process improvement, and organizational communication. When you are building an organization, there is no organization to design, there are no processes to improve, and communicating with the organization is simple.

On the other hand, you have to be very adept at running a high quality hiring process, have terrific domain expertise (you are personally responsible for quality control), know how to create process from scratch, and be extremely creative about initiating new directions and tasks.

The reason these kinds of relationships can fail is because small businesses and big businesses simply have different needs. In the broadest sense, both are profit-seeking enterprises seeking to maximize return on investment. But there are an infinite number of ways to accomplish that goal, and different environments (external and internal) call for different strategies. And therefore different managerial and leadership styles.

It is not safe by any stretch to assume that an individual, team or organization that thrives in one environment will thrive in the other. Small businesspeople can avoid a lot of hiring headaches by simply taking a good look at what their environment is, and what skill sets are a best fit. Top-down management or bottom-up? Routinized, mechanistic administration or creative, spontaneous inspiration? Collaborative teamwork or individual initiative?

Not sure which approach your organization needs? Start by looking at your own tasks, projects, and daily routine, and go from there.