Next week, the blog is taking a break to eat turkey and all the trimmings. Wait—the writer is. Not the blog. Blogs don't eat. You know what we mean. Anyway, the blog will return with an all-new post on November 30. Happy Thanksgiving!
Do you know what operational efficiency is?
You probably do, if you stop to really think about it, but most of us tend to think of it as the kind of thing you recognize when you see it. Defining it, or articulating steps to making it happen requires a few pieces of information, including what it is we’re trying to make more efficient, and what resources we have at our disposal to address it.
More to the point: increasing efficiency isn’t something you can just DO; it requires some investigation, planning and preparation. The best accounting firms out there have achieved high levels of operational efficiency through discipline and effort—but don’t let that put you off. The returns are well worth the work you’ll put in.
But where to start? You could have hard data suggesting your firm isn’t as efficient as it could be (and if so—you’re already ahead of the curve), or you might just suspect that things aren’t running quite as well as they could. Either way, there are four steps you can take to put your firm on the path to greater efficiency.
Define the problem, clearly.
If you’re in the camp that just has a vague feeling that things could be more efficient, ask yourself—where is it that I suspect things are misfiring? Is there a problem with staff dedication? Processes? Client communications? If you have hard data, then you have a leg up on this step, because you know where the issue is.
Create a concise, but complete statement that anyone could read and understand. “We aren’t billing as much as we should be per staff member,” is a good example. Don’t get into causal factors just yet. If you jump ahead without some investigation, you risk coloring your outcome. In the next step, you’ll be looking for the information that will help you determine why this problem is occurring.
Here’s another step you might be ahead on, with any luck. Once you know what your problem is, gather data to help you identify causal factors. This could mean LITERAL data—like reviewing billing records. Or it might mean just learning simple facts that could be part of the problem: three staff members are over the limit on the number of clients they should be supporting, for example.
This could be one of the more challenging pieces of the puzzle in increasing efficiency; while sometimes you have a solid idea of what the contributing factors might be, other times it can be a mystery. Be tenacious, and don’t chain yourself to the idea that one of a handful of things MUST be the problem if the data suggests they aren’t. Sometimes the cause of an issue is greatly removed from the problem it’s causing. You might really need to dig in.
Assess the available resources.
Does this problem require money? People? A new process? All three? Take stock of what your firm has available to deal with the situation. Before you can produce a workable solution, you need to know if the resources required to execute it are readily available.
Depending on the extent of what’s required, you might want to start a record that makes sense to you—a simple list or a spreadsheet—that will help you keep track of what’s available to apply to your solution. That could be anything from available staff hours to budget.
When you’ve finished, apply what’s available against the stated problem. Is it enough to help solve the problem and drive efficiency? If not, why not? If your problem is pressing enough, you’ll want to explore ways to gain access to the needed resources—even if you need to do that over time.
Turn all this discovery into a problem statement and put your plan into action.
This will include a few different elements, which you can walk through in this guide. Note that there is no one set way to write up your problem statement, but what you want to take from it is a clear idea of what’s wrong, what it is you might be able to do to fix it, and how that fix could be implemented.
Then it’s time to execute your plan. There are multiple factors involved:
- Obtain buy-in from any leadership required and anyone who will help implement.
- Make sure everyone’s roles and responsibilities are clearly defined.
- Have a mechanism in place to measure your progress.
- Look for unintended consequences (did something else suffer because of resource use, or attention paid to this problem? If so—your solution isn’t optimal).
- Have a goal you want your plan to achieve. Quantitative is often best.
- Assess whether the plan was effective—did it achieve your goal, and did it do so without hurting something else?
- Determine whether the problem is addressed or needs ongoing attention.
One thing you don’t want to do in this exercise is confuse efficiency with outrageously unachievable expectations. Every resource—whether that’s a person, piece of equipment or dollar—has a limit as to what it can achieve. Expecting more than that limit is a prescription for disaster. Keep your expectations realistic, trust your data, and move decisively to course correct, and you’ll be well on the way to building better operational efficiency.
Oh yeah, we might have one more idea on efficiency.
It goes without saying that when your staff has to spend valuable time doing things that aren’t earning much revenue, efficiency is diminished. And if they have to do menial things repeatedly, the drudgery can lead to dissatisfaction and decreased output.
Bookkeeping is just such an activity. Botkeeper has automated it, using a brilliant combination of artificial intelligence, machine learning, and highly trained accountants. By taking the details of bookkeeping out of staff hands, you get better accuracy, far better speed, and the ability to repurpose your staff into activities that earn and do more for your firm.
We’d love to show you how it works. Check it out today!