Figuring out how to become an efficiently run small business is the one thing most people target by focusing attention on increasing their profits; trying to accomplish this can, at first, seem overwhelming. However, if you know where to focus most of your attention, you will be one step ahead of the competition. Your labor force is the one thing you have direct control of. Implementing various strategies and philosophies will greatly affect your bottom line and have immediate effects on the success of your small business. Communication is also another key factor in slimming down a company’s wasted revenue.
There are many tools to help optimize your labor in an effort to slim down your workforce, ultimately generating a more efficiently run team. Labor banding is a tool that helps to categorize a multi-departmentalized company and helps to allocate a certain percentage of the company’s wage. Implementing overall salary expense ranges to a specified department budget can help to prevent labor dollars from being squandered. The general idea of labor banding is to give you an idea how much labor it takes to produce a certain amount of revenue. Set limits to salary expenses and aim to work within the specified targets.
Another tool to help leverage your labor in a similar fashion relates to your sales per labor hour (SPLH). This particular tool allows you to analyze how much sales your labor generates per hour worked. Markets that generate sales on a weekly basis benefit greatly from this because it enables them to study on a weekly basis about whether or not their increase in sales per labor hour for what they spent capital on. Look for an increase in SPLH as a great indicator to labor efficiency. If a business is geared more towards a seasonal generated income then using seasonal workers helps to maximize your production output during your busiest times of the year. Meanwhile, during the slower intervals of the year your staff should be slim and functioning on a core structure of workers.
Every small business owner wants to increase their bottom line, turning over every stone possible in their pursuit of efficiency. No matter how large or small their company is, the most important key to its success is communication. Communication is the oil that helps everything run smoothly. Whether your business is email driven or based on conference calls it is important for every professional to communicate in a clear, open, and honest fashion. Miscommunication leads to innumerable lost labor hours and lost sales. Use these three things when you communicate to help establish an honest environment, enabling coworkers to work together as a team.
Part of the communication piece is to always set expectations with your workers. This enables workers to understand exactly what is expected of them in their role within your company. Sit down with your employees and have an in depth conversation to make sure that what you expect of them in their role is completely understood.
Once expectations are set and workers understand what is expected, go ahead and establish a presence of authority. This gives workers a set of parameters to work within. It enables them to present questions and problems to someone immediately instead of running around trying to figure out who can help solve a problem. One of the biggest efficiency killers that a company faces is the run around workers experience when responsibility is dispersed randomly throughout a department.
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