A successfully managed work-in-progress system for your solo business can help you improve profitability, cashflow and customer satisifaction.
The main benefits of a good work-in-progress (WIP) system include:
Once you know which products/services are profitable you can aim to promote them over less profitable areas. To get a clear picture, break down a job into labour and materials. You may not be able to implement changes immediately but it will help make future jobs more profitable.
With no work-in-progress system in place, it’s difficult to know when to invoice. Slow invoicing equals working capital tied up, for example in money paid to suppliers. Funds for this might come from your own pocket or an overdraft. You need to get organised, as banks take a dim view of those asking for funds yesterday!
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Naturally enough, unhappy customers are bad for business and cashflow. They delay payment and give poor references. Service providers who arrive on time, at the right place, with the correct materials and get the job done get prompt payment as well as repeat business and referrals.
If you rely on repeat business a WIP management system is vital. A mechanic who proactively contacts customers when it’s service time, for example, can expect a boost in income. His customer will appreciate that he helped them avoid unnecessary breakdowns.
Ease of information management
When customers call, how easy is it to retrieve their information? No system may mean keeping customers waiting for a call back. This is time they can call competitors, increasing your chance of losing work. Poor information management gives the impression this is how your business runs.
Information is key to a professional business. It’s less of an issue keeping it in your head when business is small, but it can cause problems when you want to grow your business.
Consider, too, that a systemised business will get a better price should you ever wish to sell it.
Are there good systems backing up your business or is it something that lingers on your to do list? Let us know.