Article written by Jannie Rossouw, Head: Sanlam Business Market
“Optimisation simply means that you take a bunch of little things that don’t seem to be very difficult to change and all of those little changes have a multiplying effect and you get a giant change from all of those tiny changes.” – Tony Robbins (American author, entrepreneur, philanthropist and life coach)
Business optimisation is the process of measuring the efficiency, productivity and performance of a business and finding ways to improve those measures.
Here are a couple of pointers to consider when we think about optimising our businesses:
Start with ourselves
Is my skill set still relevant to lead my business into the future? There is a risk of becoming complacent and relying on our experience and vested skill set. First of all we need to understand what the main future trends in our industry are and then we have to determine if we as a collective (me, my staff and infrastructure) will be relevant in the years to come. This might necessitate us to reinvent ourselves and our business to be fit for purpose for the future. When business is slower it provides us with the opportunity to prepare ourselves for the next upswing in business and future prospects.
Our business premises
Are our premises located in close proximity to our target market? (Or is this not important?)
Do we rent the premises or own it outright? What is the best option for us?
Are our premises too big, or too small for our operational requirements?
Do we need to consider subletting a part of our premises to another business (if our rental agreement allows that, or if we are willing to do that as owners of our premises)?
A product-focused business needs to put in a concerted effort to make sure that stock levels are optimal (not too much, too little or aging stock) as this ties up our cash flow.
Aging stock should be moved – consider a sale at discounted prices.
If stock was purchased on credit – make sure you have the best (i.e. longest term and cheapest) payment terms.
If things are tight, we can consider letting our staff work shorter shifts or decreased hours. Another option is to replace staff who resign with contract workers, which will give us more staff capacity flexibility. It is also prudent to use ‘down time’ or a slower economy to upskill our staff.
In the South African business context it is important to manage and improve our BEE credentials. This can be structured in a way to benefit our business with regard to cash inflows and access to new markets.
Optimise business opportunities to pursue
We might be chasing many business opportunities with a remote chance of materialising in business. To list all opportunities and to rank them in order of likelihood of coming to fruition can be a productive action to focus our limited business resources more effectively.
Optimise upselling to existing clients
Many of us are merely chasing the next new client for our businesses, forgetting the fact that we already have a current client base. Capturing client information to direct marketing messages and special offers to may seem cumbersome at first, but worthwhile once we have their information on record, knowing that they will be more likely to purchase another product or service from us.
There might be an opportunity to re-capitalise our businesses to improve cash flow and business growth. Leveraging our assets and debtors books (if we have) may just finance our next big transaction or business expansion.
My circle of advisors
Robert Kiyosaki calls it our “Mastermind Group”. They include our accountant, banker, property advisor, financial planner, business coach and other successful business owners. Use their collective expertise and experience to help you solve your most difficult business challenges or that big opportunity you cannot crack. Mutual trust and respect is of critical importance and all should be willing to repay the favour.
I trust that this article will motivate you to look at business optimisation from a positive angle and that it will help you to find ways to propel your business forward in any economy.
To support business owners with the important task of business planning, Sanlam gives you free access to the book Your Annual Business Game Plan for Success, which provides an easy and straight forward framework needed to draft a well-crafted game plan that will create the positive change and growth necessary for business success.
Go to www.sanlamgameplan.co.za to download your free copy.