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5 key factors to get right to have a successful business

Service Performance Insight* produced the white paper – ‘Introducing the 2016 Best-of-the-Best Professional Services Organizations’ in April 2016
In it they say there are five key factors that determine the success of the best organisations:

– Client relationships
– Human Capital Alignment (posh word for HR)
– Service execution
– Finance and operations

So, what was it about the top rated companies that made them the best?

The best companies showed the following attributes for each factor:

1. Leadership – They have a clear and compelling vision which was communicated. They demonstrate transparency and clear communication with all staff. Staff are empowered and it’s ‘easy to get things done’. Innovation and continuous improvement are part of the culture.

2. Client relationships – They have excellent sales and marketing and are particularly good at getting new clients.  They also have good collaboration between sales and delivery which helps in winning successful bids and great client references.

3. Human Capital Alignment – They have robust recruitment programmes, and only recruit the best. And then look after their employees – with for example, a higher number of training days than other companies. Culture was also cited as being very important – it has to inspire everyone. Many of these companies were nominated as ‘Best Places to Work’.

4. Service Execution – They are able to deliver consistently and excellently. Largely due to having excellent, repeatable processes and a dedication to quality.

5. Finance and operations – The best run very tight financial ships.  They don’t waste money on unnecessary expense. So they don’t have fancy offices or spend on non-billable travel. They prefer to spend the money investing in their staff and having integrated systems to support their staff and services.

And the results speak for themselves – Top tier companies (Level 5 – more on this in the next section) substantially outrank the Level 1 companies across a range of measures, including:
– Annual revenue per employee for a top rated company was $215 vs $91 for a Level 1 company
– Profit (EBITDA) was 36% for the Level 5 companies vs 0.7% for a level 1 company.
– Bid to win ratio – Level 5 companies were converting 6.41 out of ten bids compared with 4.07 for a level 1 company.

Whilst the research looked only at PS organisations, these are factors that will make the difference for any organisation.  Additionally, they had evolved how they ran their business through process improvement.

Good process is the key to business success

The report breaks down companies into five levels showing how companies mature based on process development.

Level 1 – Ad hoc processes
Companies with ad hoc processes. 30% of companies had ad hoc processes. This could mean several people do the same activities in different ways, or that processes could vary from month to month.

Actions you can take

  • Take time to identify your processes.
  • Identify the gaps in process.
  • Which processes are good?
  • Which ones are cumbersome and need work?
  • If you struggle with identifying and documenting process, get someone to help you.

Level 2 – Repeatable processes
Companies have started to develop process that are repeatable. For example, invoicing processes are documented and are done in the same manner time and again by all staff.
25% of companies were at this level.

Actions you can take

  • Having identified which processes work, document them and have them available for all to use. All staff (if you have them) should be trained using these processes and new staff can be trained one them.
  • Where you have identified processes are missing for regular activities, work on efficient ways of carrying them out. e.g. for your marketing, are there ways to automate your email campaigns using tools such as Mailchimp or Aweber, so that responses to emails are automatic and help progress a prospect towards being a potential client without you having to manage each and every case, up to the point where you will make personal contact.
  • Can you outsource any processes to staff or external resource such as a virtual PA or a bookkeeper freeing up your time to concentrate on growing your business?

Level 3 – Standard set of operating processes
There is a standard set of operating processes that everyone uses. This could be an operating manual for example. This helps towards improved efficiency. Time is no longer wasted on re-inventing the wheel all the time and new staff can be trained so everyone carries out the same actions in the same way. This is irrespective of the types of process or business discipline whether it’s HR, marketing or finance.
25% of companies are at level 3.

Actions you can take

  • Make processes for each area available in a central location, so they can be accessed by all staff (or outsourced staff), or even if it’s just you, where you can easily find them.
  • If you have staff, delegate responsibility for the processes in their area to them so the processes are kept up to date.
  • Communicate any changes.

Level 4 – Measure and control
This is when companies will start to gain advantage over their competitors because, not only do they have standard operating procedures, but they also have in place measures and controls.
Processes are measured against KPIs (Key performance indicators) to ensure they are moving the business towards the strategic goals of the business.  And they have measurement controls in place. i.e. there is regular review of performance against the measures and  actions can be taken to ensure they stay on track or if they need to make adjustments.
15% of the companies were in this category.

Actions you can take

  • Identify the measures that will help you track your business to meet your targets. Make sure you distinguish between the end goal and the measures that will get you there.
    For example, (a non related business target) you may wish to lose a stone in weight. That’s your end goal, but the way you measure that is by monitoring the number of calories you consume a day or the time spent exercising a week.Or a business one – you want to generate £10,000 in new sales each month. Your measures may be the number of new leads you get a month (which you know convert into a % of sales to achieve that goal). Another measure could be the conversion rates at each stage of the sales process.
  • These need to be documented and you need to be able to measure them.
  • Review them monthly to see how you are actually performing against the targets.

Level 5 – Continuous improvement
The remaining 5%, and the stars identified by the research, had evolved into learning organisations. The focus has become continuous improvement. By having standard operating procedures which are measured and reviewed regularly meaning the business is running as smoothly as possible, companies can concentrate on how to improve their business. This may be quality of product, improved supplier relationships or better delivery times.

Actions you can take

  • Review your strategy regularly – annually is a good benchmark
  • Take time out of your business with your key staff or with external support to work out what has gone well and what needs improving.
  • Are there new products or services you can add that work well with your existing products and services that improve your customers’ experience or add value?
  • Plan for change.

The Chameleon Guide has a diagnostic tool that can help you measure against the key factors (Leadership (strategy), Client relationships (Sales and Marketing), Human Capital Alignment (HR), and Finance and Operations) to help you identify where you are strong and where you may have weaknesses that are holding your business back from growing.
For more information contact – info@thechameleon guide.com

* Source: http://spiresearch.com/psmaturitymodel/

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About the Author:

About Karen Espley, blogging for The Chameleon GuideKaren Espley of The Chameleon Guide works with ambitious small business owners on her Profit Accelerator Programme. She brings pragmatic and real world advice in a group setting to help her clients make a significant difference to their business through increasing profits and running a highly effective business.

Offering workshops and group profit programmes for companies wanting to reach their full potential.