I have a number of phrases that I find myself regularly saying to my clients and “Are you a business or a charity” is one of them.
Many owner-managed small businesses tend to not have the structures in place to effectively monitor and manage their staff nor assess the levels of service they give their customers (more can be found on that subject here). So when this happens they start ‘giving away’ their money or product for free – hence my expression “Are you a business or a charity?”
Whilst a little tongue in cheek, there is a lot of merit to this question. Any small business aspiring to grow will need to ensure they are profitable and can only achieve this by putting systems & processes in place to monitor and measure the effectiveness and efficiency of all staff as well as delivery to customers (this is like putting the foundations down to build a bigger house).
Consider 2 equally important areas for ensuring you run a profitable business:
Commercially you need to implement systems & processes that can be physical systems (e.g. IT, software tools) as well as documented processes (e.g. monthly reporting, expense claims). Some of these systems staff will love (e.g. a well run appraisal) and some they will not like (e.g. time sheets) but using all the tools appropriately is part of someone’s job (consider this, if one of your staff only does 80% of their role well, are they willing to only accept 80% of their pay?).
A sales team that isn’t hitting targets needs to understand what their targets are and how to achieve them so the pressure can be fairly put on them. A project manager needs to know how much time and resource to allocate to a project, and that the resource is adequately trained. They then need to be able to monitor time usage. All this requires systems.
“But we don’t want a bunch of work to rule robots” I hear you say, and of course I agree! This is where overlaying your values ensures everyone understands and embraces the systems & processes and uses them in the spirit of your culture. They should be willing to go the extra mile for clients (maybe +10% but not much more or you start to move into the ‘charity’ status!) but also understand the need for profitability.
So next time you find yourself giving away too much of your value or time for free ask yourself “Am I a business or a charity?”