One Thing You Must Do Every Time Your Business Grows 50%

I hear it all the time…

Small business owners are frustrated with their businesses and they don’t know where or how to start.

You got into business because you had an idea, a passion for solving a problem, and you knew you could make money doing it.

The problem is that a few years into it, it all seems unmanageable.

It’s like a wild rosebush. Beautiful from a long distance out; your friends comment on how lucky you are to have your own business. But from close up, you know where the thorns are and you seem to get poked by them every day.

You know you’ve got to clean up your business, streamline processes, and cut the fat to make a profit. But where do you start?

How Often Should a Time Audit Be Done?

How often are you supposed to focus on eliminating, combining, rearranging, and simplifying?

After having been close up with many small businesses I’ve developed a thumb rule and process for the whole idea of simplifying a business to grow profits.

I took my inspiration from Steve Jobs when he returned to Apple…

When Jobs retook the helm as CEO, Apple’s product line had ballooned to over 15 different computer models. It was so bad that his own people couldn’t tell the difference between the models and didn’t know which one to sell to which client.

A year later Apple was down to just two laptops and two desktop models; one each for home or business. Profits began to flow again and the following year Apple launched the iPod.

So don’t feel bad; this shows us is that even the big boys businesses get messy.

But when is the right time to do streamline your business and how do you do it?

Here’s my rule: Every 50%.

Every time your business grows by 50% you need to examine what’s going inside it and make sure that you don’t have any effort being devoted to products or activities that won’t grow the business.

Why 50%?

Simple. Every 50% in growth is enough that you start to create new roles and job descriptions in your business. It’s enough growth that you start to provide services to clients that become a little customized compared to other clients.

When a business grows from 10 employees to 15, that’s just enough growth that you may add a second person to handle more activity in one job description.  Did that second person get taught the right way of doing things?

What if you had to split a role because a person got overloaded from the growth? Is the work flowing the way you want it to, or the way it needs to?

And how about that big new special client you added last year that was such a windfall for your business? Sure, they needed things done in a slightly special way, but it was worth it because of the increase in sales. What impact has that had on your team a year later?

Each of these things muddies the waters, confuses your clients, and causes quality problems. It’s just enough growth that you need to check in on your team and see how they’re spending their day and just exactly what they’re spending it on.

And so every 50% increase in your business, I recommend that you do a Time Audit.

What’s a Time Audit?

It’s actually pretty simple…

Its detailed look at how each person in your business spends their day. If you track time by project, that’s not a close enough look at your business.

A time audit records everything from how long 4 people sat waiting for the last and fifth person to show up to the meeting, to how long someone spent doing something special for a client, to how many times an employee had to stop and get permission to move forward with their work.

For three days it records everything that your team does so that you can see just exactly how they spend their days. At the end of it, you’ll know where all the bottlenecks are and where effort is wasted.

How to Streamline Your Business?

First, gather your team and explain that because of all the growth your business has gone through you’re certain that some of them are spending time on things that likely aren’t very productive.

Let them know that you understand some of them are doing things because someone has to do them, but you need the details to make sure that as the business grows these activities are the things that they truly need to be focused on.

Let them know that you know you’re going to discover some things that are going on that won’t be fun to discover, and that’s exactly the purpose of this exercise.

Second, on a piece of paper ask them to record each activity they do throughout the day for three days straight. Every time they have to stop and wait, every time they have to change focus, every time they need to check with someone else. They should also record how long it takes them to do this.

Next, meet with each person and discuss each activity, especially the ones that stand out because they either waste time or are being done by the wrong person.

Fourth, evaluate all of the opportunities that you see for simplifying processes and realigning work. Chose the three biggest opportunities for streamlining work and redefining responsibilities and let your team know what you’ve chosen to work on first.

Only work on three at a time. Managing the change will keep you plenty busy and you want to make sure the change sticks. After you’ve completed those three, move on to the next three.

Doing a time audit on your business every time it grows by 50% will help you refocus and simplify your business at just the right time.

Author: Philip Williams was raised by a serial small business entrepreneur and became a three-time Inc5000 CEO outside the family business. He sees business problems through two lenses: First, what does the information tell us? And second, what’s the best path to get everyone on the same page and feeling good about it? Follow Philip at @askphilipw