Inside Small Business | Small Business & Home Business Marketing

What’s your process?

My bread-and-butter consulting comes from doing business analysis of process. There are about 3 main things to avoid when designing business process - and almost every client I work with has violated these rules…so I thought i’d put these out for you to think about.

1. Don’t replicate something you can reuse. I have a client that supports their products with 2 different processes. One process if you call their call center. A completely different process if you order via the web. The customer experience is VASTLY different, depending on the channel you choose, but the product you receive is the same. It costs the client twice as much to support their product, because they’ve replicated their entire product support infrastructure twice. This also illustrates one of my favorite tenets of the “new” web economy: Putting a traditional business on the web will usually highlight the poor business practices of the business…because now all the internal workings of customer service are now exposed to the customer.

2. Avoid audits & inspections. Any time you have someone checking someone else’s work - this is ALWAYS a waste of time. One client has 80 people performing a check of sales orders - rejecting those orders back to the sales people to correct them. Better process design would be to enforce some edits on the sales people’s order forms so that they can’t make bad selections…that way, you don’t have to check them. While this example isn’t quite so extreme for small business - it should illustrate that good process design will ensure that work gets done right the first time - instead of inspecting it into the back end - at additional cost.

3. Avoid handoffs - collapse the job responsibilities. Your customer is the ONLY focus you should keep as you design your customer service process. If you hand off from an ordering clerk, to an inventory clerk, to a shipping clerk, to a billing clerk as part of your fulfillment process, you run the risk of providing poor customer service. Many times, each department will insist upon the “longest interval” as their agreement to provide service. If each department listed has an “allowed” 72 hour turnaround, there will be a 12 day lag before your customer is served. Better process design would collapse the job responsibilities (with more training) to a “customer service agent” that can handle the transaction from initial order through to billing fulfillment. That way, inefficiencies of handoffs are avoided, and your “customer service agent” can ensure that the customer has been truly served.

A business is nothing but a collection of it’s processes. Make sure yours are designed to take care of your customers - not your internal groups.

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Tracking Performance

It is always important for us to track performance regardless of the task. We watch overall gross income performance, profit and loss, inventory costs, expenses, and all sorts of other performance indicators. We also watch job performance. We track tasks like phone orders taken per person, number of customer service emails sent, and number of web site updates made. It’s extremely useful to know what jobs are being done and how efficiently they’re being performed.

There are drawbacks to all this tracking though, and I didn’t understand much of it at first. I’m still learning too, but I’ll mention a couple of lessons that I learned here. For instance, I had to learn to really analyze the numbers to get the whole story. We started tracking our shipping workers’ numbers so that we would know how many packages they ship out per day per person. Sometimes a shipping worker’s numbers would be far lower one day. They might have been taking inventory or working on something still important, but not related to the single number we were watching. It was a problem. We’ve since learned to judge performance based on a number of factors, not just one.

Another issue with performance tracking is deciding how much information to provide to employees. The whole objective is to improve performance by tracking it, not to create contests or destroy quality in a wild dash for higher numbers. I’ve found that it’s best to track and privately review performance with employees instead of having the performance numbers sitting out there for all to see. We’re also trying to avoid the phenomenon where an employee hits their usual satisfactory target number and then slows down for the rest of the day.

It’s difficult to know what performance benchmarks to track and how. Every company is different and I won’t assume that your company works just like mine. I do think that performance tracking is valuable and necessary, but figuring out how is completely up to you.

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Learning to Give Responsibilities to Others

Being a (very) small business owner, I’ve experienced a trend over and over again that never seems to get easier: giving up responsibilities, duties, and decision making to employees.

When we started eReplacementParts.com every responsibility fell directly on the owner’s shoulders. We were in charge of building the site, writing all the content, taking all the orders, and shipping all the tool parts. Just from talking to other small business owners I know, it seems that lots of companies start this way. Perhaps yours did as well. Maybe it still operates that way.

For us right now, growth is our focus. We work hard to sell as many parts as we can and not be content with simply maintaining sales levels. As we grow, we need more people to make the company work and that means I have to give some, and then eventually most, of my responsibilities to others. To be honest, it’s tough to let go. Now we have entire departments dedicated to shipping our packages, taking customer phone calls, and building the website. When I walk through our building, I pass many people and their jobs used to be my job. I took a lot of pride in doing those jobs and it’s hard to really let go and trust that my employees will handle things as well as I did. And while they’re not clones of me, they’re able to handle their individual responsibilities just as well as I can and they’re far more specialized.

I think giving up responsibility is a tough thing for any business owner. For some small companies, the goal is to maintain size and perhaps the owner prefers to retain a large share of the load. That’s fine, but I believe that a small business will remain a small business as long as the owner is the primary worker. Potential is limited. If the goal is to grow, a business owner must give up some responsibilities to employees so that he/she can focus more on the company itself.

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Week 2

This has been an interesting week for Escondido Real Estate and the mortgage business. Interest rates have been all over the map, moving by over 30 basis points on the 10 year bond twice this week. The good news is that once it went up, and the next time it came down. I like the coming down part better.

Office difficulties this week, as the property management company decided that they really needed to install a roof drain directly above my office. That meant that everything got a nice plastic covering and I was consigned to working out of my car for an entire day. I love being self employed.

On a different note, House Resolution 5830 in the US House of Representatives is dealing with the ongoing subprime crisis, and trying to decide how the government will run to our rescue. Ronald Reagan once said that the scariest phrase in the English language is “We’re from the government, and we’re here to help.” It looks like both parties, Mr. Obama, Mrs. Clinton, and Mr. McCain all feel like there needs to be a “principal cramdown” to reduce the amount of debt owing to no more than 90% of the current appraised value. That’s going to cost billions. Of course, the current flood of foreclosures is costing billions as well.

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