This is actually a “Part 2” article on the importance of time management in small business. As we discussed in the previous article, in order to successfully implement the recommendations and guidance that we give to business owners, we need them to have great ways to manage the madness and chaos of their businesses! If you can’t handle new changes and your work right now, it’ll make it very difficult for you to effectively implement the strategies we recommend!
Ergo, here are recommendations and reasons why time management is so important…
You Gain Real Financial Benefits
Through More Efficient Management of Time
This starts many times in management of hours with internal labor. Efficient time management minimizes the need for overtime, reducing labor costs. Overtime is fine every now and then, but if you let this get crazy, then you could be spending thousands of dollars each year, or each month of payroll, without asking yourself the harder questions. Why do your employees need to work overtime? By ensuring that tasks are completed within regular working hours, businesses can avoid the additional expenses associated with overtime pay. If you find the overtime hours are consistently needed, then you should ask yourself if it’s time to hire additional help!
Proper time management also leads to better resource allocation, ensuring that time and money are spent on activities that generate the highest returns. You want to always ask yourself about utilization. If a high-earning employee could delegate tasks to a lower-paying employee (that can still sufficiently do the job), then the higher earning staff member can focus more time on higher revenue-generating activities!
By Increasing the Team’s Productivity
When business owners manage their time effectively, they can focus on activities that directly contribute to business growth. This increased focus leads to higher productivity and better business outcomes. This comes as a result of effective task completion too! Following deadlines and even working ahead of deadlines helps ensure more efficient project completion and the ability to take on new projects sooner.
The business owner’s (or general manager’s) example is vital to the success of everyone else on the team. A great manager or leader leads by example. So if the manager is slacking off on their obligations and isn’t putting in the hard hours that it takes to run a successful operation, the employees will take note and not care as much about their work. It creates a very unhealthy ripple effect. “Do as I say, not as I do” doesn’t work in business, and honestly, rarely ever works!
Seeing Growth in Overall, Net Profitability
It starts with your gross profit margins after lowering the costliness of your cost of goods sold (COGS). We’ve been talking about time management and how it relates to labor and productivity. This is solely focused on the efficiency of your COGS, the direct costs of the goods or services you provide to your customers.
But this just scratches the surface! When you’ve become great at your time management, you’ll also be very efficient with your overhead expenses. Time management enables business owners to identify and pursue new opportunities, driving revenue growth. By efficiently managing time, owners can dedicate more time to strategic initiatives that boost profitability. This can’t happen as well if we’re constantly in the weeds of day-to-day work. This is why it’s a common ambition for business owners to work more ON the business, versus IN the business!
By seeing greater net profitability after all of this focused attention and discipline, the business owner now has more flexibility to, as stated earlier, pursue new opportunities and make the business more financially rewarding.
And at the end of the day, like Sam Walton famously stated, “There is only one boss [at the end of the day], the customer.” Timely delivery of products and services enhances customer satisfaction, leading to repeat business and positive word-of-mouth referrals. Your overall reputation grows overtime to produce fruits that you couldn’t imagine were possible. And by “overtime”, we mean years later. At Get Better Bookkeeping, we’ve had clients we didn’t even know were paying attention to us, but just waited years until they found the right moment to contact us!
You Establish a Healthy Work-Life Culture
By Prioritizing Your Personal Well-Being
Effective time management ensures that business owners have time for personal activities and family, contributing to a healthy work-life balance. You want to be careful with this. You can’t take advantage of the rewards of the business too greedily. If you are leading by example as a business owner, make sure the staff can join in with this example! The staff also needs to see that as the company grows and becomes an easier obligation for the business owner, it’s also more enjoyable and “life-giving” for the staff.
This overall leads to reduced stress, which creates fantastic, beneficial ripple effects throughout the organization. By managing time effectively, business owners can reduce work-related stress, leading to improved mental and physical health. And when this happens, it leads to a magical result that very few small businesses are able to realize…
Establishing Long-Term Sustainability
Since you’ve made time management a key priority for your company, you’ll see this “ripple effect” I’ve been referencing fall into place. A balanced approach to work and personal life that prevents burnout, ensuring that business owners can sustain their efforts over the long term. The profitability of the company’s gross margins and net margins are healthy, even while employee and business owner morale are strong. You’ve put in place systems and processes to almost guarantee that this will continue for your company. You have baked into the business the habits and philosophies to always learn and improve.
You’ve now built a company that should last a very long time. There will be unforeseen challenges that come your way. In the last twenty years, we’ve had multiple, catastrophic recessions, weather that greatly stalls business, diseases run rampant and other cultural influences that prevent customers from confidently contributing to the economy. Yet, all sorts of companies last a long time, even without all of these time management measures we’ve discussed.
You got this!
