The Invisible Employee Draining Your Profits

Do you sometimes feel like there is so much more your business could be accomplishing? Does it seem like that the business revenue and profits are suffering but you just can't quite place your finger on the source?

Well, odds are that your intuition is correct! Market research has shown that over 80% of managers and owners recognize that their business could likely be doing more and nearly 60% of these businesses are losing 20% to 30% of their potential revenue as a result. While several factors could be contributing to these shocking numbers, there is one undisputed culprit. Its not easy to detect as a source of troubles - even though it hides in plain sight. It's the Invisible Employee!

This Invisible Employee can be found in every business on the planet...unless the business still operates by pen, ink and candlelight! He lurks nearby every desk, in every office and at every job site. He sometimes causes havoc on the business operations while other times he's just simply lazy and doesn't do a d@#$ thing! One thing is for sure, he can take complete control over the business and that could be very good or a critical disaster!

The reality is that he's somewhere in between. His laziness, or ineptness, makes the business sometimes fall short of its goals. He often hinders the ability to complete work and that contributes the majority of the 20% to 30% loss of revenue for the business.

But honestly, it really isn't his fault. He's just not properly trained. He hasn't be given the right tools. He's just not getting the attention he needs to perform at his best for the business! A little TLC is all he needs.

<<queue record scratch sound>>...

...Okay, okay. Enough of the theatrics! The Invisible Employee I'm referring to is your Business Management System (BMS).

Wait!! Don't tune me out just yet!

I'm serious about your business system wrecking havoc on the business revenue. It's true that many businesses are losing 20% to 30% (or even more) of their potential revenue and its primarily due to the fact that they are not utilizing their BMS to its full capacity. Instead they are opting for inferior, inefficient processes. I'll spell it all out below...as well as the numbers to back up the claim of increased revenues!! So keep reading! It may just help put your business on the fast track to growth!

What is a Business Management System (BMS)?

Just to make sure we are all clear on what a BMS actually is, quite simply, it's the combination of computer hardware and software at the core of your business that you use to run the day to day activities. It may include tentacles that reach into other remote areas of the company but all the information ends up in the core system. Some of the common functions of a BMS utilized by most companies are things like scheduling, accounting, invoicing, billing, inventory management, appointment tracking, project tracking, reporting, etc.

Get the BMS system perfectly right for the business and the company can be transformed in such a way that the work can seem effortless and the business soars to new heights. But get it wrong, or even partly wrong, (by the way most DO get it wrong) and the business can suffer the domino effect where certain problematic parts of the system affect others. The cause usually takes the form of some inefficient process and if that process has been a part of the business for a while, it's very hard to detect it as a source of trouble. But, once identified and isolated, changes can be made to improve and place the business back on track...with the properly chosen BMS of course!

Think of Your BMS as an Employee - Not Just a Tool!

There is a very good reason why I titled this article in the way I have. In the company, who do you go to when you need work done that requires some unique skill? Why THE person who is highly specialized in that skill...right?

A BMS specializes in process efficiencies...performing tasks for employees (automation) or providing an efficient set of steps to follow that complete a task (streamlining). The end result is more time available so employees can handle other more critical functions...or perform work that software systems can't (like turning a wrench - robots are a story for another day!).

So why don't businesses utilize this Invisible Employee more frequently? It never eats, never sleeps, never takes a vacation nor complains about any of the work you give it. Its an ideal employee that highly specializes in making business functions easier and more efficient. Why don't more businesses take FULL advantage of this highly-specialized employee and give it all of the automation and streamlining tasks they can identify?

Well, there are reasons, just not good ones!

The Effects of Inefficient Processing to Your Business

I think everyone understands that having inefficient processes, no matter where they occur, are NOT a good thing. This is certainly no different for a business. But why? Let's dive a bit into explaining how inefficient processes can affect the business.

• Wastes Employee Time - I'm sure this is an obvious impact. Its kind of part of the definition of "inefficiency". What is surprising is how MUCH time can be wasted. Studies have shown that even in companies that have software systems in place, 2-3 hours of a single employees' day are still wasted on manual processes. That's huge! The good news is that with proper discipline, you can solve these inefficient processes and avoid them from creeping back into the business and draining your profits.
• Costs the Business Money - Pay attention to this one! It comes as no surprise that when time of an employee is wasted, the business suffers in lost revenue. That's because the employees cannot contribute directly to revenue growth. But it's a double-whammy as the business ALSO has to pay the employee labor for that wasted time. In order to try to gain back the lost revenue, the business would have to pay the employee labor again for the revenue generating work. Did you get that?
• Results in Poor Quality - Inefficiency can affect Quality on two fronts. First, if the process used to review quality of the completed work is not focused on the right things, sub-par work might be missed and go un-noticed into the final product. Also, wasted time can lead to reduced time to complete a job on schedule. This creates pressure to complete the work in less time by cutting corners in either the work being done itself or in the review of the completed work. Again, sub-par work can go un-noticed. What business wants to deliver results where quality is less than 100%?
• Reduces Morale - Morale is indirectly related to inefficient processes but is still important enough to bring up here. An employees' satisfaction with their own work plays a big part in whether or not that employee stays with your company. If the employee is struggling with inefficient processes that make the work difficult to perform or contributes to frequent mistakes, they'll leave. The last thing you want to be doing in your business is constant training of new employees!

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How to Identify Potential Areas of Inefficiencies

There are endless impacts to the business from inefficient processes. This is because there are endless different types and kinds of businesses and each has their own unique processes that can go sideways in several different ways. If you need help with your specific business in identifying areas where processing can be improved, then I encourage you to enlist the help of a professional who can strategically analyze your business operations and make recommendations.

For now, I am listing, in my opinion, the 10 most commonly prominent areas to look at that could impact nearly every business.

1. Employees Are Making Data Entry Mistakes Frequently - Date entry mistakes show up most commonly in two ways, 1) Same entered detail is represented in several ways (e.g. misspellings); 2) An employee gets part way into entering info only to have to back out and repeat a part of the process because of a missed step. These may seem like small innocuous issues but they can become more problematic like #3 below - can't find info quickly. These are signs that the software wasn't designed to enforce business workflows. The mistakes, even though human error, will most likely never go away and only compound when more employees are entering data.
2. Duplication of Efforts - Employees should never need to enter information more than once into your BMS. If they are, this likely means you have two separate systems that are not communicating well with each other. See "Poor Communication Across the System" for more details.
3. Employees Cannot Find Information Quickly - If employees need to fumble around in the system, or take several actions in order to find the information they need, this is a clear indication the software wasn't created with the business usage in mind. The wasted time adds up quickly when the info being retrieved is commonly used information. This problem also raises its ugly head when trying to create progress reports for the business. Its critical to have accurate reporting. If info can't be easily found (maybe because of #1 above), generation of reports becomes a manual process to overcome the human error.
4. Too Much Time Being Spent on Manual Processes - When the business is forced to create processes outside of the BMS in order to get the tasks done, this shows incompleteness of the software for the needs of the business. Manual processes are likely the most common waste of employee time. They could be something as simple as a few minutes spent on plugging information into a calculator for a desired result or hours spent to produce progress reports in Excel. Not only can your system do these things more accurately and much faster bust also your employees could be doing something else at the same time.
5. Processes Are Overly Complicated - Many times a BMS might have employees jumping through hoops to complete particular work tasks. Often, the steps to complete the work are separated and actually being completed at different times. The disjointed steps leads to a complicated workflow. This type of issue stems from a lack of complete understanding by the software company of the business process. If time is spent to achieve that understanding, a more simplified approach to completing the work can usually be found.
6. Workflow and Processing Bottlenecks - Another sign of inefficiency is if you find that your employees are waiting on information or details in order to move forward with their work. These take the form as a workflow deficiency, for example, the job site address wasn't entered when the order was taken and now the technician has to wait for the correct address to drive to. Processing bottlenecks within the BMS can also happen. Maybe some important computed information is held up because of a missing bit of data or is just simply a long-running process on which the employees must wait to finish before they can move forward.
7. Poor Communication Across the System - If you are finding trouble getting information entered in one part of the system to another part, then you are suffering from poorly integrated system components. This is usually prevalent when you have different BMS software that is trying to talk to each other, or maybe they just simply can't talk to each other. If its the same BMS software, then the system is suffering from poor internal design.
8. Delays in Information - The delays we are referring to here are a bit different than discussed so far. It could be your system parts are all connected well, yet information entered or computed in one part of the system takes an inordinately long time to get to another. This kind of delay is usually caused by bad system design where information needs to make many stops along the way from point A to point B with each stop slowing the transfer of information. The cause here also stems from poor system design.
9. Low System Performance - Poor system performance presents itself as slow loading data into an app or usage of the app is sluggish to complete a function or respond to an action. There could be multiple causes of this from poor system design, to improperly sized hardware or, more likely, mismanagement of large sets of data.
10. The Processes Can't Be Modified - ALL of the software issues described above are solvable. They are only a big deal if they can't be corrected in your system. It's probably not surprising that a software company will sometimes get things wrong. But if the software "can't" be changed or is overly expensive to modify causing the business to refrain from making changes, this is the BIG issue. Isn't this what software is for? After all, there is a reason why software has the word "soft" in it!

As stated at the top of this section, there can be many more areas in the usage of your BMS that are wasting employee time. It depends on the specialized nature of your business and the functions implemented in the BMS. Identifying them is the key to understanding WHAT the inefficiencies are so you can make plans to correct or improve upon them.

How Can You Increase Your Revenue by 20% to 30%?

I can make you a promise right here and right now. If you are suffering any inefficiencies in your business, and you probably are whether they are related to the BMS or not, and you take steps to improve them AND you apply the saved time towards revenue generating operations such as completing more work or attracting new customers...you WILL see an increase in revenue!

Okay, that's a little more obvious than it sounded in my head. But let's explore this a little deeper. According to an article by Small Business Matters Online.com:

The average small business actually generates about $100,000 in revenue per employee. For larger companies, it’s usually closer to $200,000. Fortune 500 companies average $300,000 per employee.

Working backwards, if you are an average small business, each employee contributes about $100,000 towards the annual revenue. Putting this into hourly terms, assuming 48 worked weeks (4 weeks time off for vacation and such) and using 40 hours a week...each hour is worth over $52 towards the annual revenue of the business. For ease of calculations, I'll round down to $50/hour.

Now imagine, if you could save each employee 1 hour a day by improving inefficiencies within your company. What is that worth? Let's see...5 saved hours a week times 48 weeks worked times $50 revenue per hour = $12,000 towards the annual revenue per employee. If you have 10 employees, that's $120,000! 30 employees = $360,000!!

It gets even better! Many studies show that, even with software systems in place, companies are still bogged down with inefficient processes at an average rate of 2-3 hours per day per employee. If we are to believe that these estimates are accurate, then for a 10 person company the average annual increase of revenue would be $240,000 to $360,000. While a 30 employee company would calculate at $720,000 to 1,080,000 annually. These numbers compute to be an annual increase rate of 24% to 36%!!!

And as the infamous infomercial says "But wait, there's even more!". The number I originally based these calculations on was the lowest of the average annual business revenue per employee at $100,000. Most of you reading this article right now are connections in my LinkedIn network and in the HVACR or Plumbing industries. You might be happy to know that these industries clock-in with average annual revenues per employee in the range of $130,000 to $200,000. How do I know this? You can go to several websites online and lookup HVACR or Plumbing businesses for sale. They give you the annual gross revenue for the business and the number of employees. From there its just a simple calculation. The point is that the dollar amount in increased revenue would be even higher!!

I know these numbers seem to be a little impossible! In practice, your business probably wouldn't reach these amazing results. But consider if you could achieve only half of these reported increases in revenue. Wouldn't that still be an amazing accomplishment on such a comparatively small investment in a software system?

The Solution to Make Your Business Revenues Soar

You now know why your business isn't accomplishing as much as it could. And you now have a clearer understanding of why the revenues and profits are lagging. So what can you do to get your business on track for amazing growth? Your options depend on the kind of BMS software you have adopted for your business.

Multi-Tenant BMS Software

Multi-Tenant software is a BMS system that is shared by several companies (tenants) much like residents of an apartment building. Even the data stored by the system is all stored together in a common data store. As each tenant logs into the system, they are shown only the information that pertains to their company.

The advantage of these software systems is that they provide a very low-cost solution for your business. These systems are great for a company that is just starting out and operating on a low budget. They still allow for automating the major business functions and allow the business to get off to a great low-budget start.

The down-side is that you can't make any changes to the software - unless its a change that benefits ALL of the tenants. That's because changes will appear for all of the businesses using the system. If you are now serious about exploding your business growth, then you'll want to get out of the multi-tenant BMS and get into a system that allows much more security and customizations. From a growth perspective, you may actually be doing your business more harm than good by continuing to use this type of system.

Off the Shelf Ready-To-Use BMS Software

These types of systems have been around for 3 decades or more. Basically, its a pre-built software system that contains the majority of functions used within your industry. The software would be installed on your own hardware or cloud-based servers you lease. The system is not shared with any other companies so its a lot more like having your own software

The advantages of these systems is that you can get a software system installed and up and running very quickly. The software vendor is usually very knowledge about the product and the industry. They usually include services to migrate any existing data into the new system and they provide periodic updates to the system to correct software bugs or apply improvements.

However, these companies are still reluctant to allow customized software changes to the system. The main reason is the vendor installs their software at hundreds to thousands of business locations and to manage that many custom versions of the software is extremely messy. If they do, they usually want to charge a premium for those updates. This extra cost can make the BMS system expensive and financially prohibitive. So, again if you are very serious about taking your business to the next level, this software option may not be the best choice.

A Custom BMS Software Solution

There is no doubt that a custom BMS software solution is the ultimate way to ensure that your business is getting the most bang for its buck. You will be able to build the software to fit precisely your business needs. You'll be able to request changes to the software over time as needed to make sure it continues to be as efficient as possible.

The thought of such a system conjures up images of a high dollar price tag. And if you are partial to getting a prestigious software system that includes iOS and Android built mobile apps as well as a sleek desktop application, then yes you are right, that system will cost you a pretty penny to build. Now don't get me wrong. There are times when such a system is absolutely needed. The business will most assuredly get a very well built, performant and sleek software system.

Today, there is a new player in town when it comes to custom BMS solutions. Cloud-based computing and major advancements in web applications has made it possible to get a custom built software system that exceeds all of the business needs. Not only can these systems run on pretty much ANY device - desktops included - they also provide a very flexible development platform allowing changes to be made and rolled out to users at a moments notice. The best part, they are extremely easy on the budget costing just slightly more than a multi-tenant BMS software solutions yet providing the power of a custom system. And if you can find a vendor that allows changes to the software as you need them, your business will be set for long into the future..guaranteed!!

The Very Bottom Line

To be truly serious about growing your business, you'll need to take a hard objective look at the operations of your business. And you'll want to start with the very core, the core of nearly every business on the planet, your Invisible Employee...the Business Management System. If its not performing at its full potential or your business is not taking complete advantage of the processing it could be providing then the rest of the business will suffer. Period! It'll be like throwing money out of the window.

Step back and observe how your system is being used and note where the inefficiencies are. Then make a plan to resolve them. Your goal should be to obtain 100% efficiency - automate all manual processes and streamline all operations to their simplest form. You'll likely find, that with your current system, there are some processes you simply cannot resolve right now. But that doesn't mean that they cannot be resolved. You'll need to dig deeper.

At some point, you'll need to make the hard decision of upgrading or even replacing your BMS. If a new system can save at least 2-3 hours per day COLLECTIVELY across all your employees, it will probably be paying for itself. That's just the raw numbers. Todays new systems are much more powerful and flexible so the benefits WILL go far beyond that initial savings in wasted time...you'll see!

But I need to pause here and strongly caution you...There is still work your business needs to do to gain from the benefits a new or updated BMS system can provide. The improved BMS is simply a means to an end. The business must be disciplined and divert the freed time into those money generating tasks such as completing more billed work and bringing onboard more new customers. This is how a BMS helps with the business growth.

Once, you do have the right BMS system in place and the processes streamlined, your business will be poised to scale up and experience explosive growth!! The rest is up to you and your business!

Be sure to like this article if the content was helpful in anyway. If it wasn't helpful, tell me why and info you would like to know more about.