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SME Intro to Automation: Money is made not saved - Wasting money by saving money

At BlueHub as Cloud Consultants we work with lots of start-ups, small and one person businesses helping them set up efficient cloud and Xero add-on back office and operational system. We noticed a trend in the way business owners and managers think, which is leaving a lot of people stuck, working on menial task rather than doing work that moves their business forward.

A lot of our clients were stuck in this way of thinking for years before realising "there must be a better way" and looking at Xero and Cloud business systems. (What is Xero?)

If your reading this post then you to are probably begin to realise how much time you are losing to easily automated or outsourced tasks.

Business owners and managers undervalue their time.

What is this common way of thinking?
Filling out accounts, database updating and other repeat admin and menial task are a regular day-to-day occurrences and need to be done. The issue is when high value members of a team choose to spend time doing these simple "must-do" task rather than working on future revenue generating activities.

Why do they do this?
These task need to be completed and the business owners/managers are trying to get the job done quickly and avoid small expenditures with the idea that; this saving is going to improve the businesses bottom line.

What is the problem with this way of thinking?
We all do this; we underestimate how long it will take to complete a simple task – just because something is simple to do does not mean that it is quick. How many times have you started cleaning your house to find yourself two hours later still cleaning the kitchen cupboards?

In an effort to make a short term financial saving by avoiding paying for admin staff, outsourcing or an integrated system to reduce menial work. Business owners and managers take time out of their working day, or worse home life to complete these tasks. This takes time away from revenue generating activities and business development, which will result in months or years of income.

How Architects are using Xero Add-ons to fix the problem

We work with a lot of Architects, setting up WorkflowMax which is a cloud project management system with some great features for Architects and other professional services.

Architects usually charge there time out at £50-£100 per hour. As with most professional services time is the architect's biggest spent resource. Some of our clients have admitted to spending over two hours each day on menial and repeat tasks, which is ten hours a week that could be spent on; completing projects sooner, generating new business and growing networks for future business development. All of these options would result in much more money coming in to the business (in the long term) than that which is saved in the short term by taking on these task yourself.
So the question is: Is this saving the best way to boost your bottom line? Or, could this short term saving be costing you money in the long term?

We have all heard this famous example: With a net worth of $72 billion Bill Gates earns around $114.16 per second from 6% interest, meaning if Bill was to drop $100 it would not be worth his time to pick it up.

While this example is slightly off as Bill earns his $114.16 if he's sat on the beach, flying a kite or picking up his carelessly dropped $100.

Most of us are not in old Billy's position and have to put in work to earn our money. But there is a still an amount of money, where it is not worth it for you to be spending your time working on easily outsourced and automated tasks.

If our Architect example charges £60 per hour and spends 10 hours a week on menial task rather than on chargeable work, they are missing out on £600 a week, which is £2400 a month. The Xero Add-on that we implement for Architects reduces admin by up to 70% and cost £29per month, saving them £1651 a month if they choose to spend the time working on revenue generating activities like completing projects.

Tasks like updating accounts, databases and records need to be kept on top off and must updated regularly. What options are there for business owners and managers looking to complete these task while they focus on bring value to their business?

3 ways to automate and outsource

There are three main ways to automate and outsource these task, each with pros, cons and times to use them:

On-board more staff

Pros:

  • Having admin staff onsite means that you can allocate jobs and plan work for your employees to complete while you focus on building revenue.
  • A member of staff will learn how your company works, processes information and how you keep records.
  • A key benefit is being able to quickly change what task the employee is working on, to respond to the rapidly changing environment of small business.
Cons:

  • Employees are expensive; the average SME spends £1800 a month on administrative staff.
  • Contracts restrict how easily you can adjust the amount of hours worked each month, which is not ideal for smaller companies, where the amount of work changes weekly.
  • Humans can be slightly unreliable between; sickness, family and holiday it is impossible to guarantee that your employee will be on sight, on the day you need them most.
Time to use
If a business menial tasks are varied in nature and/or require a person to answer calls or reply to email, admin staff are a great choice as they are flexible and able to react to changing situations.

Integrated Cloud Systems

Pros:

  • There are many cloud systems and Xero Add-ons all design to fit different needs making it easy to find a system that fits your needs and often cloud system are fitted with and API which allows developers like BlueHub to build on products to add further customisation.
  • Traditional business systems cost tens of thousands to build and implement, now cloud systems are paid for in small monthly subscriptions, which is great for improving cash flow.
  • Automation is the main aim of these systems and through integrating multiple systems this automation can be taken to the next step, completely removing the need to double key information and improve reporting.
Cons:

  • Systems are not designed to be flexible. Each system is designed to complete a specific set of tasks and to add automation to other part of your business usually requires another system to be implemented.
  • Cloud based tools still require some human interaction, so an amount of training is required for you to start to use any new tool.
Time to use

When you have process that are repeated frequently such as planning projects, managing stock, updating accounts, email marketing, tracking time and cost to name a few. Cloud back office system are all design to increase overall business efficiency and ultimately help boost profits, through reducing admin, double keying data and improving business process.

Outsourcing

Pros:

  • Find people with exact skills you require: Sites like UpWork and Fiverr are marketplaces where you can hire skilled people from all over the globe
  • Outsourcing sites gather people from around the world, which allows you to hire people in countries where people ask for less money for services, such as Asia and Africa.
  • Unlike employees you can outsource specific task to suitable candidates at the time that suits your business, reducing wasted money on ideal admin staff time.
Cons:

  • While reputable outsourcing network sites have review systems, to help identify reliable candidates. This does not guarantee that you will be happy with the result, even if they for fill the brief the quality or style may not be to your suiting and there is little that can be done at this stage.
  • Time zone differences can impact delivery times and communication. As on ongoing resource it is wise to use people who are located in a complimentary time zone.
Time to use

If you require a specific skill then marketplaces like UpWork can be a great way to hire experts in a field for a specific job restrict cost to the exact time needed to complete the job. In our experience with outsourcing, time differences can be used to your advantage having work completed while you sleep.