Improving My Business – The Small Business Challenge Part 8

Let see where I have taken this business challenge so far.  The vision of the business is documented, reviewed, revised, and established as the current living document for sustainability and consistency.  The business structure has been broken down into components and assembled in a manner reflective of a puzzle and will also be added to the living document list.  The work flow and the process flow through the organization are documented, communicated, and proven out, also making them living documents to provide consistency through the organization.  Did I mention, these are all living documents and should be reviewed periodically and communicated…at least yearly, but if things dictate, sooner is appropriate.  The costs have been determined at a level of knowledge to facilitate pricing for adequate profit margins even with competition is working hard to take business prospects and opportunities away.  At this point everything has been documented and communicated and the business is staged for sustainability and potential growth.  Everything must be OK now, right?  Not necessarily.

                Knowing the pulse of the current health of the business is the only way to determine when things are going as planned or improving…or going wrong.  This is done by reporting against things that are important.  The default and most obvious reporting are the financials, which are typically with the accountant.  Financials area almost always reported on at some level.  It is the internal processes that falter before the financials get hit hard.  The piece many small business owners struggle with or don’t do at all, are the weekly reports of how things are progressing, sustaining, or improving as work flows through the organization.  Large companies typically have this one nailed down to a science.  In some cases this science is almost to the extent of too much reporting or relying too much on only the reports and not actually managing the business.  The key is to find the balance between what is a valid report and required to show progress through the organization.  This can be tough.  An even harder part is knowing when to drop a certain report and pick up another.  As the business matures and different aspects are brought into sustainable control, monitoring can potentially become less frequent or even yield way to a more detailed or finer level of report.  The biggest failure I see are people running massive amounts of reports, posting them everywhere for all to see, and then doing nothing about the actual results presented in the report.  Case in point; I was in a facility several months back where they were showing me several reports on the wall.  Impressive right?  Yes until I asked one simple question on one report, while pointing at an unfavorable value; ‘what did you do to bring this process back into control?’  No one could answer.  The report was being run for everyone to see, but nothing became actionable when the process was unfavorable for any length of time.  There were simply too many things to do and not enough staff to follow through with unfavorable results.  The key is to pick only those important reports needed to monitor the operation or process that is being targeted for sustainability and improvement that can be actionable within the staffing abilities.  Other reports can be run less often to ensure consistency.  How does this work?  If the work flows and process flows are solid, communication has been thorough and collaborative; consistency should certainly be attainable for that given product or service.  An example:  It is decide that quoting customized products are a gap that required a more formal process i.e. program or template formality as opposed to pencil, paper, and the bosses customized numbers.  A good report to look at weekly would be quoting vs. actual costs.  Once those reports show the process is in control, then maybe you move that report to monthly instead of weekly and focus weekly on a different target area.  Maybe scheduling forecast vs. schedule compliance is identified as a target.  This again can be reported weekly.  As the report is reviewed and analyzed, actionable items should be identified for improvement.  Once these are in control to a reasonable level of comfort, this can potentially become less frequent.

                The key I’m trying to make is reporting is extremely important to fully understanding processes and work flow through the organization.  It isn’t the amount of reports that are run to stage the business for success, it is what becomes actionable in those reports and that unfavorable results DO become action items for improvement.  Where to start?  Only the business can decide and is unique to each business.  How frequent?  Only the business can decide and is unique to each business.  Watch out for the traps such as the reports that are run frequently with no intentions for improvement.  It is a balance that can be hard to find at times.  As the business matures, so should the target areas for reporting.  If no reports are being looked at, don’t just guess.  This will hurt more than help.  If the other parts of managing the business are in place and solid, the initial reporting target areas will have surfaced.  Things like efficiencies, schedules, OEE, estimated vs. actual, etc., are all valid targets to be looking at.  Stay top line and broader at first.  Then as maturity grows, move into component or more detailed levels.  Be careful not to over-react to anomalies.  Analyze them, understand them, validate them, but don’t necessarily turn the company upside down over a statistical bullet point.  As I indicated before, if the other Segments/Parts of this series are followed through documentation, validation, and communication, reporting and process improvement can deliver reductions in costs and improvement in efficiencies and effectiveness.  It is a complete package and requires everyone in the organization pushing the same wall in the same direction.  Don’t build an island.

Stay Well

Scott B.