Tracking Your Progress to Profitability
Do you believe that revenue is the most important metric on a company’s financial statements? If so, you aren’t alone. For most companies, that belief is so strong that all of their focus is placed on increasing revenue. They believe that revenue can fix all business problems. Unfortunately, many businesses also struggle with problems that growing revenue can actually intensify. With an increase in revenue, we often see an increasing demand for product, a need for better customer service, additional attention required to establish and maintain cost-effectiveness, and a greater need for better management of the overall business process. Another major problem with businesses who focus primarily on upping their revenue is that they fail to manage their service delivery with the same enthusiasm that they manage their revenue creation.
Why is it Important to Track Key Business Processes?
Imagine a situation where we don’t have to sell more to increase our revenue. Sounds strange, right? However, it is possible. We can start by being smarter about how we manage projects and exercising better control in key business processes, including ordering, inventory, delivery, and service. Honestly, tracking our work more effectively and refining the way we deliver our projects impacts profitability.
GoDaddy’s CEO, Bob Parsons once said, “Measure everything of significance. Anything that is measured and watched, improves.” That is exactly why it is important to track your key business processes. Doing so provides you with a scorecard that shows the areas where you’re excelling, as well as any areas in which you need to improve. Consistently measuring these areas will lead to a significant improvement in performance. With operational dashboards, businesses can spot and fix problems early which saves them from having to deal with those problems after they have become bigger. Not to mention, tracking progress will improve your employees’ productivity. Employees who know that they are being reviewed on key metrics will strive to achieve positive reviews.
Benefits of Tracking
One of the most obvious benefits of tracking every part of your business lies in identifying and eliminating errors. A report by Gartner Group has confirmed that organizations can reduce errors and staff time by 75% or more by fully automating the timesheet process. Simply automating that one process made quite an impact. Tracking allows companies to monitor projects, make sure they are on track, assure that resources are being properly allocated, and that costs are well-aligned. Such insights allow managers to address problems before it is too late. Business management software is essential for every business, allowing them to accurately and effectively track what is going on in their company. The advantages of using business management tools goes beyond the possible reduction of errors, though. Here’s are other key benefits that business management tools offer to accelerate profitability:
Analyzing real-time project profitability. If a business is tracking individual employee hours, project progress, and different charge-out rates, then using project management tools will help them determine the ever changing profitability of their projects in real-time. Businesses can then leverage this information to create better project plans, allocate resources smartly, and ensure better response to their client’s needs.
Reducing revenue leakage: Automating the timesheet process can help businesses capture staff time accurately. This will allow them to charge their clients more specifically, eliminating any scope of under- or over-servicing clients. That’s just one example of how to stop the leakage and increase profitability.
Improving time management: Businesses can identify the exact time spent on performing client-facing, billable tasks, like brainstorming and production, and time spent on non-billable tasks like internal staff meetings and new business pitches. This will not only help businesses estimate the time and resources required when a new project arrives, but it will also help identify seasonal workload fluctuations, allowing them to adjust accordingly.
Increased Productivity: An automated business process will rule out the need for the formerly painstaking, manual process. Employees can then devote more time to client-facing activities, which will in turn result in increasing a company’s billable tasks.
Evidently, it is possible to increase profits at every step in a project; sometimes by a little, sometimes by a lot. In the end, it all boils down to tracking, managing, and leveraging the right software and tools to enhance the bottom line of a business. If you do that, then the increase in revenue is bound to follow.
What area do you feel you would most benefit from in tracking in your business?
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