When you start a business, you have to be extra careful with how you spend your capital. There are many ways for small business owners to increase their profits. Reducing their costs is one of the simplest and most effective ones. A lot of the times, entrepreneurs would add costs to their budgets that they don’t necessarily have to make. It might appear to them that these are necessary expenses when that’s not the case. They can add many of these expenses once their business has established.Expenses That Small Businesses Should AvoidExcessive AdvertisingYes, advertising is quite important for businesses, but excessive advertisement is not. It still makes sense for large businesses to go full-on with advertising because they have the budget to do so. However, when it comes to small businesses, they must do intelligent and selective advertising only. Their first course of action should be to identify the advertising channels that work best for them. Just because you are a restaurant at the corner of a street does not mean you have to use awnings, vinyls, neon signs, and all other types of materials for advertising purposes. Pick the ones that work and skip what doesn’t.Too Many Work HoursYou don’t necessarily have to follow the trends of your competitors to compete with them. It does not matter how good they are, even the best ones can make mistakes at times. Many business owners choose to keep their premises opened for customers for long hours. They will open the business early in the morning and close it late at night just so they can serve more customers. However, one must do cost calculation before taking such a step? What if you are getting only five customers in the first three hours of the business and five more at the last two hours?Now imagine the cost of utility, wages of your employees, etc. Are you covering the costs of keeping your business opened for five additional hours with only 10 customers? Even if you want to continue this way, you better test it for a week only. If the response is cold, you should quit this practice as soon as possible.Pursuing the Best of EverythingThe idea sounds great but is not the way to go about doing business when you are in your early stages. You should spend your money on things you need, not the things you want unless you have the budget to do so. If you are renting space for your office, you should look for a place that you can easily afford. Going for the best location in the most commercial area will cost you a lot of money. You can save your money even when it comes to internal equipment. Why buy new couches, seats and brand new computers when you can do with high-quality used equipment?Why go for a printer with fancy looks and capacity to print hundreds of pages in a minute when you won’t ever need that many printouts at a time? Go with simple and beautiful when it comes to decorating your office. You don’t want to spend your budget on things that are not going to yield any benefits for your business.Hiring IT StaffIT is integral to any business today, tech or non-tech. However, it does not mean you have to have an IT team on board. One of the beauties of modern technology is that it allows you to outsource a lot of the business processes. The best thing about outsourcing business processes is that you can save a lot of money by doing so. Managed IT services are a perfect way for you to save IT costs while benefitting from expertise of the best professionals of the industry. Rather than paying thousands of dollars to three or four IT people, it makes more sense for small businesses to outsource their IT processes for a small monthly fee.The good news is that you can outsource almost anything IT-related. From basic helpdesk to on-demand data officers, IT outsourcing can cover a lot of ground for you.Unnecessary DebtsTaking loans when starting a business is imperative for your growth and to have enough cash in hand to support your operations. However, there are more ways to fund your business than you might realize. Many small business owners follow venture capitalists and conventional banks when it comes time to fund their businesses. However, crowdfunding has emerged as an amazing funding option for startups and small businesses. The good thing about crowdfunding is that you do not necessarily have to offer equity to the investors in your business. Sometimes, you can just reward them with a sample of your product.Hiring Only Full-time EmployeesIf you own a small business, you might want to consider hiring interns. Interns can benefit your business in many ways. First, you do not have to pay them the salary of a full-time employee. Second, you can ask them to do a lot of the mundane tasks that otherwise affect the productivity of your full-time employees negatively. While it might not be the best practice, in some countries of the world they have free internships as well wherein you do not have to pay your interns. However, that’s not the right thing to do, and you should compensate their work to keep them motivated.ConclusionYou should consider avoiding these expenses if you are a small business owner or about to be one. You can always take advice from those who have their own businesses to figure out what’s necessary and what’s not. Keep yourself up-to-date with new technological advancements. Taking advantage of modern software and hardware solutions can help you save a lot of money. Take the example of a printer with duplex printing option. You could cut your paper costs in half by printing on both sides of the paper. In the end, look into your current setup and operations to see what some expenses are that you can easily live without.
Some Unnecessary Small Business Expenses to Avoid
The Mini-Project Manager Concept
“Manage from the bottom up; not just from the top down; this creates personal commitment and accountability.”- Bryce’s LawINTRODUCTIONA couple of months ago we started a free service to analyze a person’s style of management. Through our “Bryce Management Analysis,” a manager answers a series of questions (30 in all) and, based on his responses, we produce a report which assesses his style of management as well as other attributes.The data collected from these surveys has confirmed a lot of my suspicions; that companies are regressing back to a Theory X form of management. Over the last twenty years we have witnessed a dramatic swing from a Theory Y or Z form of management, back to Theory X. Whereas workers used to be empowered to make decisions and tackle assignments (a la Theory Y or Z), managers today tend to micromanage every action or decision in their department. Workers are told what to do, how to do it, and when it has to be done, with little regard for their input. We see this not only in the corporate world, but in nonprofit organizations as well. The result is that organizations today are run by control freaks who would be more content working with robots as opposed to human beings. This mentality has resulted in an apathetic workforce that doesn’t trust management. It also breeds contempt and disloyalty for management, as well as making for some excellent fodder for such things as Dilbert and NBC’s hit comedy, “The Office.”Although there are instances where a Theory X form of management can work effectively, it nonetheless represents a top-down unidirectional “master-slave” relationship. Theory X can work well in certain crisis situations, such as “crunch-time” projects, but it is hardly conducive for a normal mode of operation in today’s society. Let me be clear on this, under a Theory X form of management, project planning, estimating, scheduling, reporting and control is performed top-down. Instead, a bi-directional approach is recommended which is a critical aspect of the Mini-Project Manager concept.THE CONCEPTThe Mini-Project Manager (MPM) concept is based on our experiences in several I.T. shops over a number of years and was first described in the Project Management activities of our “PRIDE” methodologies dating back to 1971. Unlike Theory X, the MPM concept seeks to empower workers and make them more responsible for their actions. It promotes more management and less supervision. Actually, under the MPM concept, the individual is expected to act professionally and supervise themselves.There are still some top-down activities to be performed by management, such as project planning where projects are defined and prioritized. Further, managers select and allocate human resources to participate in project assignments. It also includes establishing project Work Breakdown Structures (WBS; e.g., phases, activities, tasks) and precedent relationships between such structures. Here, the manager relies on such things as Skills Inventories, Resource Allocations, Calendars, and Priority Modeling tools.After projects are assigned, workers estimate the amount of effort needed to perform the work. This is a critical aspect of the MPM concept and is typically not found in today’s Theory X environments. Here, the worker is asked, “What do you think?” But understand this, the worker’s estimate is an expression of his personal commitment to the work involved. If the manager does not agree with the estimate, he may ask the worker to rationalize his estimate. If the manager is unhappy with the answer, he may elect to give the assignment to someone else (perhaps another employee or a contractor). Nonetheless, the estimate is an expression of commitment by the person.Based on the estimate, the manager then calculates the project schedule. Whereas the worker developed the estimate, the manager computes the schedule. Here, the manager considers the project’s WBS and precedent relationships. More mportantly, the manager considers the Indirect and Unavailable time affecting the worker. This means the MPM concept does not subscribe to the “Man Hour” approach to project estimating and scheduling. I have discussed the differences in the use of time in many other articles, but in a nutshell we view time as:AVAILABLE TIME – this is the time workers are available to perform work; e.g., Monday through Friday, 9:00am – 5:00pm.UNAVAILABLE TIME – this is the time when workers are not available for work; e.g., weekends, holidays, vacations, and planned absences.Available Time is subdivided into two categories:DIRECT TIME – representing the time when workers are performing their project assignments and, as such, estimates are expressed in Direct Time.INDIRECT TIME – interferences which keep workers from performing their project assignments. For example, meetings, training classes, reviewing publications, telephone calls and e-mail, surfing the Internet, and breaks.The relationship between Direct and Indirect Time is referred to as “Effectiveness Rate” which is an analysis of a worker’s availability to perform project work. For example, the average office worker is typically 70% effective, meaning in an eight hour day a worker spends approximately five hours on direct assignments and three on indirects. Effectiveness Rate is by no means a measurement of efficiency. For example, a highly skilled veteran worker may have a lower effectiveness rate than a novice worker with less skills who has a higher effectiveness rate; yet, the veteran worker can probably complete an assignment faster than the novice. It just means the novice can manage his time better than the veteran worker. Again, what we are seeing is the individual worker being personally responsible for supervising his own time. Interestingly, a manager typically has a low effectiveness rate as he typically has a lot of indirect activities occupying his time. For example, it is not unusual to find managers with a 20-30% effectiveness rate.Returning to scheduling, the manager uses the worker’s effectiveness rate when calculating project schedules. If the worker’s estimate is such that it greatly impacts the schedule, the manager may consider alternatives, such as influencing the worker’s indirect time (eliminating interferences) and unavailable time (work overtime or on weekends, possibly cancel vacations, etc.).This brings up another important aspect of the MPM concept, the manager is responsible for controlling the work environment. In addition to the physical aspects of the job such as the venue and tools to be made available to the worker, it also includes managing Indirect Time. For example, if a worker is working on a project assignment on the critical path, the manager may elect to excuse the worker from meetings and training so that he can concentrate on the project assignment. Whereas the individual worker is concerned with managing his Direct Time, the manager controls the Indirect Time. It is important to understand that nobody can be 100% effective; for nothing else, we as human beings need breaks so that we can refocus our attention on our work.The “Effectiveness Rate” technique serves two purposes: it builds reality into a project schedule, and; it provides a convenient mechanism for a manager to control the work environment. For example, a manager may decide to send someone to a training class to develop their skills (representing Indirect Time). By doing so, he is weighing the impact of this decision against the worker’s current assignments.As workers perform their project tasks, they report their use of time (representing another “bottom-up” characteristic of the MPM concept). In addition to reporting time against assignment, workers are asked to appraise the amount of time remaining on a Direct assignment (not Indirects). This is referred to as “Estimate to Do” which is substantially different than the “Percent Complete” technique whereby workers are asked where they stand on an assignment. The problem here is that workers become “90% complete” yet never seem to be able to complete the last 10%. Under the “Estimate to Do” approach, the worker estimates the amount of time to complete a task. To illustrate how this works, let’s assume a worker estimates 30 hours to perform a task. During the week, he works 15 hours on the task. He is then asked how much time remains on it. Maybe its simply 15 hours (whereby the worker was correct on his estimate) or perhaps he determines the task is more difficult than he anticipated and 25 hours remain (15 hours performed + 25 hours “to do” = 50); conversely, perhaps he found that the task was easier than imagined and only 5 hours remain (15 hours performed + 5 hours “to do” = 20). Either way, this will affect project schedules and the manager must then consider the repercussions and take the necessary actions. “Estimate to Do” is another example of where the individual worker is asked, “What do you think?”Although the reporting of time can be performed in any time cycle, we recommend a weekly posting. This can be performed either with Project Management software or using a manual system involving Time Distribution Worksheets. Either way, it is important for the manager to review each worker’s distribution of time (including Direct, Indirect, and Unavailable time) and their effectiveness rate for the week. This review should not be considered frivolous as the manager should carefully scrutinize the worker’s Direct and Indirect time as they might impact project schedules.A good Project Management system should have the ability to “roll-up” time reports into departmental summaries for analysis by the manager. For example, a departmental effectiveness rate can be calculated thereby providing the manager with a means to study which workers are working above or below the departmental average. Again, you are cautioned that this is not an efficiency rating and workers should not necessarily be competing over who has the highest effectiveness rate. Accurate time reporting is required to make this work properly.Both the individual and departmental effectiveness rates should be plotted on line graphs to allow the manager to study trends, as well as determining averages over a period of time; e.g., three months (quarterly) or annually.IMPLEMENTATIONImplementing the MPM concept requires a good Project Management system (either automated or manual) and a good attitude by all of the participants involved, both managers and workers alike. Some people resist the concept as it forces accountability. Now, instead of the manager making an estimate, the worker is charged with this task, something that doesn’t sit well with some people who shirk responsibility. Further, some Theory X managers falsely see it as a threat to their control and authority. However, most people welcome the MPM concept as it represents more freedom and empowerment. This helps promote project ownership by the workers as they now feel their input is heard by management, which leads to improved corporate loyalty, trust, harmony, and teamwork.By encouraging worker participation in Project Management, they tend to act more professionally and responsibly in project activities. Interestingly, as workers are given more freedom, they are forced to become more disciplined and accountable at the same time.CONCLUSIONIt was back in 1982 when Dr. William Ouchi wrote his popular book, “Theory Z,” describing Japanese management practices empowering workers. And it was in 1986 when President Ronald Reagan advised, “Surround yourself with the best people you can find, delegate authority, and don’t interfere.” Keep in mind, this was twenty years ago. A lot has happened in the last twenty years; the Baby Boomers have been succeeded by Generation X, who is also being succeeded by Generations Y and Z. In the process, socioeconomic conditions have changed as well as the management landscape. Frankly, I think a lot of the management practices of today are dehumanizing. There is little concern for the people side of management, only numbers and technology. Its no small wonder that workers are becoming more socially dysfunctional.To change this, I recommend that managers manage more and supervise less. And this is the heart of the Mini-Project Manager concept.