Why Bother with Process Improvement? (AKA. If it ain’t broke, why fix it)
As a business owner or c-level executive, you may be passionate about what you do, but fundamentally you work to gain a better quality of life, to live the dream.
You invest 8-12 hours a day working so that the other 12-16 hours are more rewarding for you and your family.
So what gets in the way of that?
When customers pay late, or worse, not at all, this can significantly impact cash flow. We all know that healthy cash flow is essential for business survival and growth.
However, late payment is a symptom, not the problem.
The root cause of late payments is a lack of robust processes to manage the risk associated with the offering, monitoring, and managing trade credit.
Inefficient and ineffective business processes will cause you to overwork, taking time away from the dream.
They will cost the business more, so you need to work harder and longer to generate more income to cover that expense, causing you to miss out on those rewarding experiences.
And let’s not forget the unnecessary frustration, loss of sleep, and stress that late or non-paying customers can cause.
If you feel like your business is taking over your life, chances are your processes are not supporting the company or your goals. They’re not fostering the right working environment for you or your team to thrive. If that process takes a long time to complete, requires more resources than it should, or produces inconsistent results, it makes your business operations less effective.
What is Process Improvement?
“If you always do what you’ve always done, you’ll always get what you’ve always got.”Henry Ford
Process Improvement in its simplest form is all about finding better, more efficient and effective ways of working. It is the proactive task of identifying, analysing and improving upon existing business processes.
There may be a specific issue you’re looking to resolve, such as late-paying customers. You may have set ambitious goals, and you need to identify what needs to be done to achieve that goal. You may be looking for ways to eliminate waste (e.g. time, money or materials), enhance quality, achieve regulatory compliance, or improve the customer or employee experience.
How Does It Work?
“Insanity is doing the same thing over and over again but expecting different results.”Rita Mae Brown (not Albert Einstein but often misattributed to him).
There are several steps to process improvement, and whilst there are many established models you can follow, they are principally the same steps.
REVIEW what is already happening in the business. Who is doing it, and why they are doing it that way? What impact is it having on the business and others?
PLAN your improvements, set your goals and metrics. What are you trying to achieve? How will you know when you’ve completed it?
IMPLEMENT your plan. Take the actions required to make the improvements.
MEASURE your success relative to the baseline established in the review.
ADJUST your changes until you get the desired results.
Even small changes can have a significant impact.
What Are the Benefits Of Engaging In Process Improvement In Your Business?
Process improvement isn’t about change for the sake of change. It’s about adding value to the way you operate.
No matter what your process improvement methodology entails, an effective strategy will deliver several key business benefits:
- Operational Efficiency and Excellence – by eliminating unnecessary steps or time-consuming manual activities.
- Higher Productivity –more efficient processes increase the ability to complete more tasks in the same amount of time.
- Save money – reducing waste, and improving efficiency leads to fewer costs. For example, if you have a robust customer onboarding process, you will spend less time, and therefore money, on chasing up late payments.
- Satisfied Customers – improved processes create better customer outcomes. Having a straightforward process for setting expectations with your customers will reduce misunderstandings and improve satisfaction.
- Improved results – efficient and effective processes deliver better results faster, as everyone is engaged with the process.
- Increased transparency – when everyone knows the part they must play in a process, it is easy for them to share information and collaborate.
What Stops Businesses Making Process Improvements?
Firstly and foremost, it’s about safety. We get comfortable with what we know, which causes us to resist putting ourselves into new situations where we can’t be sure of the outcome.
We can also get put off process improvement by what we’ve seen happen to others.
How often have you got frustrated because the AI keeps regurgitating the same (useless) answer repeatedly, and you can’t get to speak to a human being!
This is what can happen when efficiency is prioritised over effectiveness.
Often, though, business owners and directors are so pressed for time and focused on delivering against the commercial goals that they can’t give the headspace or time for process improvement unless something breaks or goes wrong in a very noticeable way. The business doesn’t have the capacity or resources to manage change.
The irony is that process improvement could save them time and help with the delivery of those goals.
Leverage The Experts – Outsource
Realising and accepting that there is a new way of doing business is exciting and can create many great opportunities for you and your business.
As the business owner or director, you’re not expected to be an expert at every facet of your business.
There are experts out there for all aspects of your operations that can bring an outside-in view of your business, a fresh perspective. They can help you face hard truths, emotional subjects and provide frank assessments constructively, supportively, and professionally.
As we explored in our article Why A Debt Collector Is Not the Answer, there are many reasons why a business may not tackle late payment by customers.
If your business has late-paying customers, let’s talk about how reviewing your processes could improve your cash flow.