The Real Cost of Inefficient Business Processes

business processes

Does your office run as efficiently as you’d like? Do you know how much your daily inefficiencies really cost? Business processes can make or break you, so here’s exactly why business improvement should be on the top of your to-do list.

Poor business processes cost money

Time is money, and basically, poor business processes equate to wasted time. When things aren’t working smoothly around the office, it costs you money. There are also some flow-on effects that cause you to lose money in ways you may not even recognise.

The wages

Perhaps the most obvious cost of process inefficiency is the wasted wages. We don’t mean that your staff are a waste, but the work they’re doing isn’t cost-effective. You can look at the wage cost in two ways. Firstly, with better processes and systems, could you actually save money by employing less people? Usually, yes.

The other way of thinking is more task-based. If your people perform mundane, repetitive work that the right software could instead, they’re not working to their potential. Rather than employing fewer people, you could have current staff doing more important work such as sales, planning – anything they’re capable of.

The re-work

When you mow your lawn, how often do you ask someone else in the family to mow it again straight away? Sounds ridiculous, right? Well, that’s what many businesses are doing over and over every day of the week. Poor business processes often mean re-doing something that’s already been done.

A perfect example is a payroll department using manual or hand-written time-sheets for employees. The employee fills out their time sheet, and payroll first has to check the accuracy of the sheet. Then, they need to enter the details into a payroll system. The better option is for employees to complete online timesheets that are checked with business process automation. Once checked, data automatically goes to the payroll system and staff get paid. Easy!

Hiring and firing

Here’s one cost that people often forget. When staff become frustrated or find themselves doing boring, uninspiring work, what happens? They start spending less time on work and more time on Seek. All of a sudden, they’re off to a new job and you need to replace them.

Not only is it time-consuming to actually run a recruitment process, but then there’s a period of inefficiency while the new staff member is trained. Ultimately, the cost is much greater than you first thought.

The long-term cost of poor business processes

Bad business processes come at a cost. But it’s not just the clearly definable expenses such as wages and re-work. The likelihood is that you’re also probably not competing as well as you could in the market, and missing opportunities. If you could take the money saved on administration and put it into marketing, imagine the extra revenue you could generate.

Over time, poor business process cost you money and holds you back from achieving growth. So, sort out those systems, and get your business on the path to success!