Sales and your sales system may be the driver of revenue, but operations are the key to profitability.
Your operations team is the machinery that turns a customer’s vision into reality. This is the foundation of your business, but that team is often the highest cost and highest risk factor for delivering margin in your business. Because your team is likely your most expensive asset, any non-productive time has a direct impact on the bottom line. This is a very common problem for services businesses. So common that we regularly work with clients that deliver profitable projects, but still fail to turn over substantial business margin.
I’ve even faced this problem myself, having spent 10 years delivering projects of all sizes in government, private enterprise and now to clients globally in my own business, Scale My Empire. With a large geographically dispersed team all over the world delivering hundreds of projects, I understand how important it is to make sure the team is as profitable as the projects they deliver.
Along the way, I’ve developed 5 key steps that are critical to delivering a profitable team. These are tried and tested, now I want to share my knowledge and get results for you. The steps are:
Think of your business like a manufacturing plant: Sales generate demand, then the team supplies time and knowledge to fulfill it.
A highly utilised, profitable team starts in sales.
Your demand (the sales pipeline) has to feed your capacity planning system. Match what roles, skills and time (your ‘supply’) are needed to meet the demand, then review demand patterns over the last 12 months to adjust for seasonal variations. Overlay that with the forecast growth from your marketing strategy, and you’ve got a sophisticated resource plan for the business that large-scale corporations would be jealous of.
Once a sale is made, it’s time to match the demand to available team members with the right skills and time availability.
Review your team capacity and allocate people to the new projects – effectively allocating supply to demand. The goal is to keep your full-time team members at least 80% committed to projects. We’re not (all) absolute machines, so this percentage will keep them profitable while taking into account real life, like meetings, coffee breaks and being human!
Now you’ve lined up the plan, it’s time to deliver.
If we are managing capacity at a resource strategy level from steps one and two already, the next bit should be easy.
With a large team comes a complex set of competing priorities. Take the hard work of managing these priorities off your team’s shoulders by setting a weekly schedule to deliver to. This allows your team to focus on getting work done instead of thinking about what work needs to be done first.
The easiest way to implement this step is to use a scheduling tool to take your resource plan and commit it to their calendars, ensuring that 80% utilisation ratio is achieved.
Measure and Monitor
Here’s the honest truth – no one loves tracking their time and expenses. But, without it, you cannot determine if your team is able to meet their scheduled obligations.
Peter Drucker was famously quoted for saying,
“If you can’t measure it, you can’t manage it.”
If your team isn’t doing it, you simply cannot know if you are overestimating, underestimating or if there are performance issues that need to be addressed in the team. Getting the team to do it is the challenge. We’ve solved this with technology – ask us how.
If you’ve gotten all of the above correct, you have also solved one of the most fundamental challenges of growing a team-based business: When to grow the team.
Hiring the right people, at the right time, with the right skills and experience is absolutely critical to the profitability and success of a people-based business. If you can forecast what roles, skills and effort are needed, adjust for growth, and compare it to what is actually happening in the business, then you can start to make some intelligent hiring decisions.
These 5 steps are crucial to delivering profitable teams.
I trust that you’ve learned enough to start the journey yourself. Otherwise, we are here to help.
Book a free systems assessment with Scott Gellatly, Co-Founder of Scale My Empire, to see where the gaps are in your operation and get a simple, free strategy to improving cash flow and profitability.
Here’s what clients have to say about Scott’s work:
“Scott is next level when it comes to breaking down complex technical structures. I have had multiple people explain the exact same concepts to me before, but to a non-tech head like myself, it wasn’t in a way I could grasp and understand. That’s until I met Scott, who broke it down in a way that enabled me to pick it up in just one training session. Now I have the knowledge and understanding that I need to take my business to the next level.”
Melissa Neighbour, Managing Director, Suburban Town Planners
“I’m a huge fan of Scott and the experience and smarts he brings to turning business challenges into applications and solutions. I worked with Scott on building an effective project management, collaboration and knowledge centre for our agency. We’d previously gone through a couple of different platforms and knew there had to be something that would work more effectively for us. Working with Scott and his team was exactly what we needed.”
David Lawrence, Co-founder, Rocket Agency
“Scott has been a valuable adviser to our business for years and has assisted us with project managing some major initiatives, which have resulted in substantial ROI outcomes and allowed us to enhance our value proposition and do more of what we do best. Scott’s methodology of operational improvement and his ability to identify areas in which efficiencies can be created position him as one of the best small business advisers we have worked with. We would be happy to recommend Scott and his team at Scale My Empire to any business that wants to reach their fullest potential.”
Jackson Milan, Aureus Financial