One of the fastest ways to have a business fall apart is to have not have the right financial processes, or – even more commonly – not having processes at all.
Process = Method * Tools
Efficiency is doing things right, but effectiveness is doing the right things. (Peter Drucker.)
Let’s assume – a whole ‘nother blog – that you’ve chosen the right thing (you’re being Effective). The tasks you choose are the Method, and specific Tools will be required for specific tasks. To be efficient, a process has to use the right method, and multiply those efforts by using the right tools: Process = Method * Tools.
Think about your own processes. Have you chosen the best Method? Are you using the right Tools? Consider your Sales Cycle:
Less Efficient More efficient
|Taking the Order||Manually||Transcribing a phone call onto a paper form||Electronic||Filled out by the customer on-line|
|Manually||Customer signature on a triplicate form||Electronic||e-signature on a smart phone with a PDF sent via email|
|Manually||Future payment via cash, cheque, or credit card||Electronic||On-site visa payment|
In nearly all cases, there’s now an app for that. Yes, they have up-front implementation costs plus transactional costs, but they pay back in spades by reducing manual processes which take longer on the face of it, and are more likely to permit errors to creep in between the chair and the keyboard.
As a general rule, your processes can hold back your business. They might slow you down, because it takes you longer to do something than your competitors, or they might cost you more in rework because you’ve not done things right the first time.