Let’s say something somewhat radical here: capacity problems are an effect, not a cause. You don’t just wake up one morning with capacity problems.
It’s a dangerous thing for firms to lean too heavily on crutch words when performing a close examination of their practices. “Capacity” is just such a crutch word. It’s a lazy shorthand that allows firm principles to nod along with their peers when engaging in conversations about the challenges their firms are facing.
But think it through — there are deeper challenges that lead to capacity issues, and those are the true problems facing your firm. Let’s take a look at four deeper topics that can lead to capacity issues.
Fairly obvious, no? If you don’t have enough employees, or the wrong kinds of employees, it’s going to be hard to get all the work done. It’s kind of a no-brainer.
But the difficulty of dealing with staffing issues just keeps increasing. With decreasing numbers of accounting grads, hiring beginners is no picnic. These days, even retaining your current staff isn’t a given. And the war for talent rages on with one-upmanship across salaries, benefits, and culture.
The sheer complexity of this issue makes it tempting to lean on the “capacity” crutch, but that isn’t likely to get you anywhere. There’s real work to be done to address staffing issues, and it’s not easy work, either.
If you aren’t sure staffing is an issue leading to low capacity, ask yourself some key questions:
Are your employees overworked? Are extra hours a regular occurrence?
Is the work you have getting done on time? Are there frequent client complaints about timeliness?
When you win new business, do you struggle to figure out who can cover it?
Is there any employee on your team who can’t seem to keep up with the others?
If you answered “yes” to any of these (and especially if you answered “yes” to them all), then staffing is a definite sticking point contributing to your capacity problems.
Start with a review of work in — what needs to be done in your firm in a typical day/quarter/year? Then look at your employee roster. Do you have the right personnel to do these jobs? Do you have enough staff to handle your in-demand services without needing to work regular overtime? Are you confident about the quality of your employees across the board?
Working out the challenges you have in staffing could occupy a book, (or at least an eBook) so use this question exercise as a jumping-off point, then dive deeper to find the answers that work best for you.
If it doesn’t look like staffing is a problem for you (and pat on the back if it isn’t!), the next thing to look at is your operational efficiency. In short, what processes do you have in place for keeping work flowing through the firm and delivering on time?
Operational efficiency is a broad term that encompasses many things, but the biggest part of it is having documented, sensible, and easy-to-follow processes that get things done. Here are some questions you can ask to help you determine if a lack of operational efficiency is causing capacity problems for you:
Does your firm experience lots of “passing the buck” on jobs?
Do you have “kludges” in place — software or stopgap measures that were never intended to be permanent?
Does your firm have meetings to decide how to handle certain kinds of work?
A “yes” to any of these hints that part of your capacity problem lies in inefficiency. You’ll need to review the path your firm’s work takes from front to back. Look for bottlenecks like the “kludges” we asked about above. You can also look for breakdowns — where in a piece of work’s journey is it holding up the longest, and why?
Locating where your firm’s inefficient processes lie might take a little time, but it will pay dividends. If after review you still aren’t sure if operational efficiency is part of your problem, ask yourself one final question: is there anything we do regularly in the firm that doesn’t have a clear and documented process behind it?
If there is, then design a process for it.
Your client mix
This one might be a bit less obvious, but sometimes capacity issues arise because you’re serving the wrong clients. There are multiple ways this could be true. To get at the truth of it, ask these questions:
Is the time you spend with each client proportional to their value to the firm?
Do you have a strategy for selecting and pursuing new clients?
Do you know which clients have the largest and smallest impacts on your bottom line?
Do you find you have “legacy” clients you might rather let go?
Depending on how you answered these questions, it should be apparent whether your client mix could be contributing to your capacity issues.
Clients that need lots of hand-holding or extra time aren’t necessarily bad clients — as long as you’re charging them for the services you’re providing. The ones that need lots of extra time and hand-holding, but who also represent a minuscule percentage of your business might be worth a review, however. If you’re unable to get them to change, it could be time to let them go.
Similarly, if you have a roster filled with low-fee clients who collectively take up the time your firm should be focusing on higher-dollar services, it’s time to revisit your strategy. See if you can upsell those clients, or automate their work (we happen to know a great little platform for automating your bookkeeping) to get it off your staff’s plate so you can bring in bigger fish.
And finally, some clients are just not worth having. Maybe they want services you’re getting away from. Maybe they’re a constant thorn in your side. If you’ve decided to take the step to fire a client, make sure you’re making a smart decision and understand what your firm gains (or loses) by doing it.
It might seem like keeping up with technology is complicated and expensive, but most times it’s not nearly as expensive or complicated as not keeping up. In fact, every other issue above could flow, at least in part, from your outdated or misused technology.
Don’t discount the benefits of the right technology in helping your firm solve for capacity problems. Properly selected and implemented, it not only pays for itself, it will help you attract new business with confidence.
Not sure if tech is one of your problems? Ask these questions:
Is all of your software still in use, regularly updated and supported by the vendor?
Do you get complaints from your employees about their computer systems or the software they have to use?
Are the people who need to use the platforms you have trained fully on their use?
Are you doing anything manually that could be automated?
Computer systems are a major expense that no business enjoys. But all systems eventually age to the point that they can no longer accommodate the latest operating system (Windows or Mac OS in nearly all cases).
At this point, the system is a ticking security timebomb.
As the system continues to age, eventually the manufacturer or operating system developer will stop supporting it, and vital security updates won’t be available. That leaves your computer systems open to attacks and malware. Most IT pros suggest replacing your computer hardware every 3-5 years, which will keep you in the green on updates and safety protocols.
When it comes to software, it’s easy to keep using something that works, but if the platform has been abandoned by the vendor or it hasn’t been updated in more than a year, there’s a good chance it lacks features that could be saving you time at the very least. At worst, those platforms have serious security issues that are unaddressed and could lead you to a major problem.
Of course, even well-kept-up software that your staff hates to use or isn’t trained on won’t gain you much, and should be addressed either with extensive training or a change to a different platform.
Automation is a wonder that’s increasingly adopted by firms to keep their employees focused on the work that pays the bills. Many “traditional” firm services can now be automated in part or in totality, taking those mostly commoditized services off your employees’ plates.
If you’re interested in diving deeper on these and other topics, be sure to visit our resources library, which has tons of great information for you.
And if you’re interested in learning more about bookkeeping software, we have an entire page dedicated to the topic that you can visit just by clicking the button below.