Unlocking Business Success - Enhancing Efficiency and Productivity

Adopting efficiency can make your job easier with better results

Continuing our series on business success is discussing the role of efficiency in improving a company’s performance. One of the best ways for a company to outperform its competitors is to be able to produce results in less time or with less waste.

An example that is still cited for improving efficiency and productivity is the assembly line used by Ford Motors over a century ago. While Ford often gets the credit, the concept predates their usage by automotive manufacturer Oldsmobile, though it was used in the shipbuilding industry before that. The general idea is that, rather than being produced by one group from start to finish, the production of a manufactured item is divided into multiple stages where specialists can focus on and optimize their segments. Similar results have been achieved using the same concept in many other industries such as housing, clothing, electronics, computers, and many other consumer goods.

So what lessons can smaller companies take from this? One way would be to streamline business processes. You would first document the full process, then analyze it. Are there any redundant steps that can be eliminated? Are there any steps that can be simplified? Do all the steps have to be done in order or can some be done ahead of time or at the same time as other processes are completing? If two people worked on it together, could they get it done in less than half the time as a single person?

A question all businesses need to ask is how technology can be used to improve efficiency. There are many examples we can see regularly. Look at the number of shops and restaurants that use a “Point Of Sale” system to keep track of sales while also recording all transactions. These also make it easier to transmit restaurant orders to the kitchen rather than making paper tickets. These are often combined with Inventory Management Systems to more quickly provide information about what is available and what must be ordered.

Even small companies can improve results and increase speed by implementing software to help with project management, business development, and collaboration within the company or with clients. And while there is no shortage of new solutions out there to create efficiencies, it’s very common that companies underutilize the solutions they already have. For example, Word and Excel have ways to automate repetitive tasks that can increase consistency and save time, but many users don’t even know how to use those features. Most companies don’t know the full capabilities of their software and often buy multiple tools that can do similar tasks. This is yet another way to become more efficient: making sure you don’t buy more software than you really need or really use.

There are a great many ways to improve your company’s efficiency in order to compete more effectively. While many managers have this capability, they often don’t have the  knowledge of the options or the time to focus on these things. This is why it makes sense to bring in someone from outside the company to help identify opportunities to make improvements in the organization. Brightleaf Consulting Group has been working with businesses for over a decade to help them look more closely at their operations so they can grow more effectively and efficiently. If you’ve hit a plateau and can’t seem to figure out why you’re not growing, give us a call and let’s see how we can help.

- John Thrush

Unlocking Business Success - Improving Growth

Improving Growth Requires Understanding Your Business And Market

“What is strategic consulting?” is one of the questions that we’re asked regularly. The short answer is that strategic consulting helps companies figure out how to improve their performance, become more efficient, and make smarter decisions more consistently. While every industry and company have their unique characteristics, there are huge similarities among almost all businesses that make much of the knowledge and skills transferable. How this work is done is somewhat more involved, but we can expand on this explanation to show how businesses can benefit from this service.

One of the first things potential clients are interested in is seeing how to improve growth. The first step here is understanding who is currently buying what and why. This can be more involved than it sounds: an analogy we’ve used in the past to ask what people are buying tools. Are they buying a drill or are they really buying the ability to make holes? Understanding what it is that customers get from a company’s offerings is the key to understanding how to expand sales. Sometimes it helps to better understand how to target customers that are more likely to want what a company is selling or, perhaps, the results that a company can provide. Other times it helps a company to develop a product or service that appeals more to a broader market or to provide increased value to a specific market.

The key to understanding these things is market research. This can include looking at the industry as a whole, identifying the segments, details about the buyers, determining who actually uses or benefits from the purchase, demographics of these groups, etc. Another important factor is identifying trends, both in the industry and outside of it. The sources for this information vary widely, ranging from publicly available reports to industry publications and shareholder information to proprietary data.

Once this market research has been collected, the company can use it to make better and more informed decisions. Instead of relying on assumptions and what might be outdated information, they can use more current data and actual details to improve their marketing to align more closely with what customers and clients want. This research can also refine their offerings such as adapting product features and options as well as  changing pricing to reflect the value provided to customers. In a larger sense, it also often impacts how a company budgets its money, allocates its staff and other resources, and ultimately manages its operations.

But growth is only one part of strategic consulting. In future installments, we’ll tackle other topics such as increasing efficiency and addressing risks.

- John Thrush

Tax Season Is Here - Part 6 - Business Tax Deductions to Benefit Employees - Employee Reimbursements

Reimbursing Employees for Using their Personal Technology Can Benefit Both Employers and Employees

As more businesses have adopted work from home policies, companies have found that more employees are using their personal vehicles, computers, phones, and Internet connections to conduct company business. In the past, companies would typically provide a company car or device in order to do company business; however, there are reasons why reimbursement makes more sense.

An advantage for employers is that this can reduce capital expenses, taxes, and even accounting costs. For instance, if a company purchases a company car to be used by an employee, there will usually be the cost to purchase the vehicle either outright or with a loan as well as all fuel and maintenance and insurance charges. These expenses will also end up needing to be tracked in the accounting system, especially in cases where depreciation must be included. Property taxes may have to be paid. Or the employer can reimburse the employee at the current IRS rate of $0.67/mile and take the tax deduction. While this does require that the employee document the miles driven, this can be done by keeping a basic mileage log or using an app.

This same concept has been extended to phones and other technology. The IRS addressed this in the Small Business Jobs Act of 2010, stating that “where employers reimburse employees for business use of their personal cell phones, tax-free treatment is available without burdensome recordkeeping requirements”. This opened up options for reimbursing employees for using personal devices without requiring a great deal of additional paperwork. Individual states have also passed laws requiring reimbursement for other necessary expenses. While it’s important to check the individual state laws, the general rule of thumb is that a written policy applied to all people working remotely in similar conditions be used.

There are options for reimbursement policies for phones. Companies can offer to pay the full bill, but that opens the door to a certain amount of risk. Another option is paying for the percentage of use that’s business vs. private, though that can be complicated to determine and take more time than it’s worth. What tends to work best is paying a fixed allowance per month for each employee which will cover a portion of both the services as well as use of their hardware. While this can be structured solely for phones, it can be extended to include a personal computer, Internet service, etc by setting the policy up as a technology allowance. A reasonable number for this could be between $30 - 100 depending on the type of work being done and the amount of use expected.

While there are arguments for this being beneficial to employers, this can also be beneficial to employees because these reimbursements for equipment or devices offset regular expenses that people typically have and making it easier for them to afford the same or possibly even better services or devices. Another advantage is that these reimbursements don’t count as taxable income for the employee, so they effectively increase their compensation without incurring additional taxes.

If you have any questions about implementing this type of policy or find out about other ways to benefit your employees while helping your business, reach out and let Brightleaf help your company!

- John Thrush

Tax Season Is Here - Part 5 - Business Tax Deductions - Education

Providing Education Benefits for Employees Can Attract Better Employees and Increase Their Value

In this competitive market, getting and retaining employees can be a challenge. Remaining competitive as an employer typically means increasing salaries; however, increasing salaries also means increased payroll taxes, both for the employer and employee. But there are ways to make your company more attractive to potential employees without incurring those additional taxes.

One way to provide additional benefits to employees that can also benefit the company is to provide educational benefits to help them in their current position or to help them advance further in the company or to advance their career. This can be in specific skills training or even tuition reimbursement at the employee’s school of choice. This allows the company to deduct up $5,250 per year per employee for their education. If an employee has any student loan debt, the company can choose to allocate that money towards those loans; however, “the option to use them to pay student loans is available only for payments made after March 27, 2020. Under current law, this option will be available until Dec. 31, 2025.”

What this means is that, between 2024 and 2025, an employer could effectively increase an employee’s pay by $10,500 without either the employer or employee having to pay payroll taxes and without the employee having to pay additional income taxes. This can be a pretty great incentive to attract new employees or retain existing employees while also making the company more competitive!

- John Thrush