Do You Really Need New Technology? Or Is It a Process Issue?
Welcome back to the Mid Market Insider!
In today’s edition, we’re going to be talking about how business owners should be thinking about technology and tools within their business.
Let’s dive in…
When I think about technology, I think about it as being a tool that has specific applications.
Dialing in your systems and processes should always come before you think about adding new tech.
Before talking about adding a new tool into your tool chest, we like to ask questions:
What problem are we solving?
How will this improve efficiency or drive revenue?
If there’s no clear answer, we either ask more questions or even don’t move forward.
Not every tool is a fit, or is even needed, for every business.
We’ve seen companies waste resources on systems they don’t need or can’t use effectively.
Our approach is simple:
Evaluate the symptoms
Analyze all aspects of the process
Determine if this is a process issue or a tool/technology issue.
Here’s a great example of this with one of our portfolio companies:
Like many businesses, they need the right amount of materials to complete their projects on time. And what they were doing was buying smaller quantities so they wouldn’t have more than they needed, and end up wasting money by not using leftover materials.
But what was happening was they weren’t buying enough materials and during the day they would have to go back and buy more… leading to inefficiencies and the jobs not being completed on time.
When we were evaluating the issue, we weren’t sure if it was a scheduling issue, estimating issue, or something in between.
The “symptoms” in this case were the jobs not being completed on time.
After looking at the process, we found the folks buying materials for the job didn’t want to waste money, but what was happening was they had to stop work on the job and go get more materials.
As you might imagine, this ended up costing the company more at the end of the day by not having enough materials.
It wasn’t a scheduling issue and didn’t need new technology to fix things — just a discussion around finding the right quantities of materials to complete the job and get things finished on time.
🚀 QUICK TIP:
If there’s an issue you’re constantly finding yourself fixing in your business, go back to the drawing board. Is that brand new piece of equipment really going to solve the problem?
Or is it really a systems and process issue that needs to be fixed?
Hope this helps!
That’s all for today’s newsletter! Thanks for reading!
📅 Next Week:
Next week we’ll be discussing The Endowment Effect and how it might lead you to believe your business is worth more than what a buyer will pay. Stay tuned…
Keep building,
Nick
P.S.
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