How Small Businesses Can Streamline Operations and Build More Efficient Workflows

Operating a small business entails juggling sales, customer service, employee management, accounting, inventory control, marketing and administration all at once. With growth comes a situation where what was once possible to manage gets increasingly complicated. There may be an increase in time devoted to mundane work, information gets dispersed, and there might even be situations where the owner gets too bogged down with decisions that should ideally be delegated.

Optimization of the operations of small businesses does not entail doing everything faster. It entails developing an efficient, consistent and quantifiable process of work that allows employees to execute their tasks in an efficient manner and gives business owners better insight into what goes on in their business.

What Does Small Business Operations Management Involve?

Operations Management in Small Businesses involves the group of processes that make up the activities that a business needs to perform in order to operate successfully. This can range from the tasks of the employees, customer services, procurement, stock control, finance management, scheduling, order management, communication, amongst other repetitive processes in the business.

Operations Management ensures that the employees know what needs to be done, by whom and how the process moves from one stage to another. Without this, the business will become too dependent on the individuals in the organization who might have their own way of doing things.

An efficient operations management system is consistent. In a process that has been well documented, it becomes easier to train employees, analyze problems, measure performance and improve the process.

Signs That a Small Business Workflow Needs Improvement

Sometimes the operational inefficiencies do not reveal themselves easily at first. A company might still be fulfilling its customers’ needs but wasting a lot of time in the process.

There are several indicators that point to inefficiencies in a workflow:

• Employees execute repetitive manual activities.
• Each employee follows a different approach for the same process.
• Data is entered in many systems.
• Employees often inquire from their managers regarding the procedure of completing routine tasks.
• Tasks critical to the operations require someone’s remembrance to be performed.
• There are delays in the processes since data has to go through different people.
• Entrepreneurs devote considerable time to administrative duties.
• Mistakes take place because of employees using spreadsheets, emails, or manually entering data.
• The firm uses different independent software systems.
• Processes become more complicated as the customer database increases.

Identifying these issues is the first step toward improving operations.

How to Audit Small Business Workflows

However, prior to improvement, the owner of the business has to know the process. Workflow audit enables to identify such activities which make no sense, bottlenecks, as well as time-consuming activities.

1. Identification of Repetitive Activities

Describe the activities performed by your staff on a regular basis, for example, customer onboarding, invoicing, order processing, appointment scheduling, employee onboarding, replenishment of stock, follow-up with customers.

2. Who Is the Owner of This Process?

There should be a person who performs certain process. By identifying the owner of the process you will be able to detect bottlenecks and ensure that the activity is not forgotten.

3. Time Needed for Completion

Identify how much time is needed for completion of each activity. Some activities take only several minutes, however, repeated hundreds of times a year they become important.

4. Identify Bottlenecks

Pinpoint the locations where any delays occur. They could be a result of employees that require authorizations before they can begin work, or have to manually transfer data themselves or wait for some other department to complete a process step.

5. Identify Redundancies in the Process

Duplicate data entry may be a significant cause of unnecessary waste. When workers are required to duplicate customer, order or financial information across multiple systems, then this suggests that the process could be streamlined.

6. Look at the Occurrence of Errors and Delays

Mistakes may be good indicators of process inefficiencies. There may be unclear instructions, hard to obtain information or too many manual steps.

Which Business Processes Should Be Improved First?

Redesigning every workflow at once is unnecessary for small businesses. It would be better to classify workflows according to their influence on business operations.

Frequent processes which take much time from employees may prove worthy of optimization. Processes which cause customers’ waitings, make many mistakes, or require much attention from the owner might also be priorities.

An evaluation could include:

Frequency + Time Cost + Error Risk + Customer Impact + Owner Dependency

For instance, a process that involves 15 minutes of administration but is performed 50 times in a week may have a better chance for improvement compared to a complicated process done once per month.

Process prioritization ensures that businesses focus on areas where they can make an impact.

How to Simplify Inefficient Business Processes

The process after workflow identification as an area for improvement is simplification of the process.

Businesses may start with checking whether each process is really necessary. There can be approvals, data transfers, or checks added some years ago but not giving any benefit anymore.

Here are several ways to improve the workflow process:

• Remove the redundant approval process steps.
• Remove duplication of information.
• Centralize all information.
• Design standardized forms.
• Clarify roles.
• Implement naming conventions and filing procedures.
• Minimize the need for passing jobs among employees.
• Set deadlines for regular tasks.
• Employ checklists for multi-step processes.

It is not about making every process as brief as possible. It is about making every process worthwhile and ensuring that each step achieves something.

How to Create SOPs for a Small Business

Standard operating procedures (SOPs) are processes which assist companies in describing how their recurring processes can be done.

An effective SOP will have:

1. Purpose – Describe what the process achieves.
2. Responsible employee – Identify who is responsible for the process.
3. Information requirements – List the required documentation, data, and/or tools.
4. Process steps – Describe how the process works in sequence.
5. Criteria for completion – Define what a finished job means.
6. Exceptions – Describe what employees should do in case of unexpected events.
7. Review cycle – Set out when the SOP should be reviewed and revised.

SOPs can make employee training much simpler and less dependent on certain employees who might be the only ones knowledgeable about the process.

How Technology Can Improve Small Business Workflows

Technology can assist companies in decreasing manual labor, centralizing information, and increasing visibility in business activities. However, technology should be used to make up for good processes but not bad ones.

Small businesses may implement technology in order to:

• Customer relationship management
• Project and task management
• Accounting and invoicing
• Scheduling
• Document management
• Employee onboarding
• Inventory management
• Customer communications
• Reporting and analytics
• Workflow automation

It is essential to select the appropriate technology considering the business model and process issues that need fixing. The installation of more unrelated applications can cause new challenges within the firm, so the issue of communication among the applications should be considered.

When Should a Small Business Automate a Process?

Automation may be useful in situations where the work process is repetitive and predictable and follows set rules. However, automation usually comes after the work process has undergone evaluation and standardization.

A practical sequence is:

Audit → Simplify → Standardize → Document → Automate → Measure

For example, if there is no standard procedure for handling the customers at all times, the automation procedure will only accelerate the inconsistency in the procedure. It will be more appropriate to first determine the information needs, and the processes involved.

Automation will make human interference in the process minimal.

The small business will then be able to think about other things like customer reminders, appointment reminders, invoice reminders, assignment of tasks, and data transfer among others.

How to Measure Whether Workflow Improvements Are Working

Improvements in operations must be quantifiable. Firms can measure performance both prior to and following changes to ascertain whether or not the change produces results.

Useful metrics include:

• Time required to complete a process
• Number of manual steps
• Error frequency
• Customer response time
• Employee productivity
• Processing costs
• Number of tasks completed on time
• Amount of owner involvement
• Customer satisfaction
• Employee time spent on administrative work

For instance, if the onboarding process for customers can be shortened from two hours to 45 minutes, that will give some indication of improvement.

How Streamlined Operations Help a Small Business Scale

Efficiency is more crucial the larger a firm gets. An activity that might work with 20 clients will not work well with hundreds of clients.

Processes that are standardized simplify the process of delegation because workers know what they need to do. Process documentation can speed up training and lead to consistency.

Efficient operations can help businesses:

• Serve more customers with less increase in administrative duties.
• Decrease mistakes and delays.
• Enhance customer experiences.
• Manage duties better.
• Have less reliance on the owners of the business.
• Tran new employees quickly.
• Utilize technology better.
• Automate processes.
• Lower operating costs.

The ultimate aim should be that of creating systems which will enable growth but without the corresponding rise in operational complexity.

Common Small Business Operations Mistakes

A company can unwittingly increase process improvement complexity by taking an unstructured approach to this activity.

Attempt to Fix Everything Simultaneously

An attempt to redesign all existing workflows at once will put too much pressure on employees. In most cases, businesses should start with some select processes.

Buying Process Improvement Software Before Process Evaluation

The application cannot solve inefficiency on its own. The underlying process should be evaluated and optimized prior to software selection.

Developing Excessively Complex SOPs

Documentation should always be understandable and useful. SOP that is little-known and rarely used will hardly contribute to optimization.

Lack of Process Owner Assignment

If nobody is accountable for a certain process, issues can go unsolved. Every significant process should have its owner.

Focusing on Activity Rather Than On Results

Performing additional tasks does not guarantee improved performance. Businesses should focus on such results as shorter processing time, lower error rate and better service.

Never Analyzing Processes

Business requirements change with time. Workflow that worked well two years ago can become inefficient under changed conditions.

A 30-Day Small Business Operations Improvement Plan

The proposed methodology will enable organizations to start improving operations without disrupting ongoing activities.

Week 1 – Audit

Identify the activities that happen periodically. Find out how they are currently being carried out. Identify how much time it takes to carry them out, who is involved, any bottlenecks, and mistakes.

Week 2 – Prioritization and Efficiency

Pick one or two important activities. Remove unnecessary activities, assign responsibility and remove duplications.

Week 3 – Documentation and Standardization

Create SOPs, checklists or activity flowcharts. Make sure all the workers are aware of the new procedure and who is responsible for every activity.

Week 4 – Automation Opportunities

After standardizing an activity, determine what parts of the activity can be automated. Set up performance metrics and measure results.

Conclusion

Operational efficiency in small businesses is created through purposeful methods instead of simply making employees do things faster. Through process audit, elimination of redundant processes, creation of documentation and setting of responsibilities, efficient processes can be created.

Efficiency through technology and automation can add extra value, but only if used for processes that are already optimized and standardized. Those businesses that adopt a structured approach can eliminate unnecessary processes, improve their customers’ experience, help their employees and optimize processes themselves.

With the growing complexity of operational processes, the opportunity to select tasks that can be automated and standardized becomes a critical competitive advantage. Small businesses that regularly optimize their processes stand a better chance of growing without getting bogged down in bureaucratic inefficiency.

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