When it comes to running a business on either the operations side or the marketing side, too many business owners do a poor job of effectively monitoring the income aspect of their business. Hard to believe, I know, but I see it all the time. Part of the problem is that income is only viewed from a monetary standpoint. Critical activities and functions within the business that can actually impact money coming in can be ignored or are not given the attention deserved.
Many who know me have heard me preach that money is only one of four resources to consider, properly budget, and leverage in a business. The other three are: time, people and technology. Once you understand there are a total of four resources, then you can truly take a look at income within your business and make better decisions in how it is being invested to build your business. Previous columns have addressed these resources with examples in detail.
This column is dedicated to understanding how time is spent within your company. It will help you more clearly define and prioritize activities, tasks, functions, and responsibilities within your business based on your people's ability to positively impact income and profitability in the business. Most important, you will begin to realize that everyone's time spent in the company is valuable and should be managed for optimal return on investment of their time.
Our company has differentiated these into five Income-Based Time Management assessment areas of focus. They are: 1) income producing, 2) income generating, 3) income sustaining, 4) income supporting, and 5) income enhancing. Do you know the difference?
Income Generating: Income generating is focused on making the sale. Your marketing activity is an income-generating function. Your sales efforts and time in meeting with prospects or being involved in activities that put you in front of prospects is income generating. Your estimating and proposal process is a part of the income-generating aspect of your business. Activities with existing customers that are specifically targeted to getting them to purchase more in addition to what they are or have already purchased is income generating as well.
Income Producing: Income producing is fulfilling what was promised once the sale is made. It is whatever goes into producing your product or service offering and providing it to the customer. Once the order has been placed, then anything involved in fulfilling the order is income producing. If you manufacture a product, then your manufacturing operations would be classified in the income producing area of concentration. If you are a consultant or offer a particular service, whatever is involved in providing the promised deliverable is income-producing.
Income Sustaining: Income sustaining is where customer relations and service come into the mix. This is any and all activity to assure that you will continue to get business from your customers either through ongoing orders of the same offering or earning the confidence of gaining referrals through your WOW service, support and ability to confirm your value and worth to your customers on an ongoing basis. Your communications with customers to reinforce your value and developments within your company may be a combination of income generating when you announce new offerings and income sustaining when you share testimony from other customers and share successes realized by customers and associates. The key here is once income has been generated through sales and produced in your deliverable, what activities, tasks and initiatives do you have in place dedicated to making sure income keeps coming in on an ongoing basis? Have you defined a customer relations and communications program? Do you have measures and standards around customer service? Offerings that provide steady, repeat income through a retainer or subscription-based approach evolve your income producing offering into becoming an income sustaining offering. Do you have any type of offering that accomplishes this? For instance, an ongoing fee-based maintenance program to support a product operating effectively is an example. A membership with a monthly fee is an example of this as well.
Income Supporting: Income supporting is activity necessary to the effective, efficient or legitimate operations of the company. Bookkeeping and administrative functions fall into this area, as well as human resources activities. Having systems and processes in place that help your company generate, produce and sustain income more efficiently and effectively is at the heart of what makes this area of income concentration essential and important to continually monitor. For instance, if your estimating process is taking an inordinate amount of time, then a system or process could make it more efficient. Too often, business owners get caught up in income supporting functions, taking their focus away from income generating and production. For example, if you are so overwhelmed by handling the bookkeeping in your business that it is taking you away from income generating or income producing, then you need to redirect that function to someone else if you are the best person to be selling and/or delivering the offering.
Income Enhancing: Income enhancing is all about building value and worth in your company beyond you as the owner. Too often, owners and leaders are spending so much time in the other four areas of the company, that they ignore this critical factor to the company being valuable and worth investing in. Is this you? Are you constantly being distracted by all the day-to-day of the business that you cannot focus on its future and what will make it a company of worth down in the long-term? From innovation and proprietary holdings to nurturing corporate culture and leadership development and succession planning, your company's ability to be sustainable beyond you is pivotal to it being a truly viable enterprise.
Take a look at your business and segment your activities, tasks, and responsibilities based on whether they fall into income generating, producing, sustaining, supporting or enhancing. Take a look at everyone, including suppliers and contractors, not just employees, and how they are spending their time. Is everyone using their greatest talents and competencies within their roles? Does everyone fully understand how their roles impact and contribute to the company's bottom line?
When you have mastered the combination of the five income areas and effectively leveraged all your available resources in your business, then you will most likely be in a position to also have income reserves to fall back on when unexpected expenses or challenges occur. Most important, you can conduct business with confidence that it is operating to generate, produce, sustain, and support income and profitability in your business, while continually growing in value for years to come.
IBTM Income-Based Time Management is a proprietary assessment and time management process developed by BizGrowth Inc. to help companies and their people more effectively value and allocate time among their workforce for optimal performance and engagement.
Sherré DeMao is President/CEO and founder of BizGrowth Inc. and author of the nationally acclaimed books, 50 Marketing Secrets of Growth Companies in Down Economic Times, www.50marketingsecrets.com, and Me, Myself & Inc., www.memyselfandinc.com, Her expertise seeks to help business owners build and grow sustainable enterprises and businesses with economic vitality and preference in the marketplace.