Is your business leaking revenue?

No matter what stage your business is in there is always a risk that revenue is leaking. If you are a startup, the pressures to acquire and retain customers may lead you to engage in business practices that greatly increase your overall risk. If you are past the startup stage your business may have outgrown the basic processes you established to get it up and running. If you are a long established business you may have been lulled into business practices that are just not efficient and therefore are costing you money you should not have to spend. Or, (scarier) you may have employees or vendors that are taking advantage or outright stealing from you. It is always a good idea to take time to evaluate what you are doing and how it is being done to be sure that you are not leaking revenue.

Purchasing:
Are you really getting the best deal on the recurring expenses that are necessary to run your business? Have you analyzed the cost of supplies, mail, phone services over time? Do you know what it would cost you to move an office should the rent rise too much? Does your bank provide the services you need at a price that is competitive? Are you paying too much for credit card services?

Processes:
Are there processes that are too centralized giving one person a lot of control with little oversight? Is there someone who never seems to be able to take time off and who never shares the processes they do with others? Some assume it is a way to promote job security, but it is also a warning sign of potential fraud. Have you taken time to talk to the people who actually do the tasks within a given process? Chances are they have a lot of ideas on how to do it more efficiently. What kind of reporting do you do? Can you measure any of the processes you do?

These are just a few basic things you can do to get a sense of your revenue risk. I would be delighted to learn more about your business and the challenges that may make these things hard to do. Send me a note!

Freakonomics

I picked up "Freakonomics" this week and was surprised to see so many fraud related items in the first few chapters of the book. The story on cheating teachers was not news. Anyone with kids in school knows that there is a great temptation on the part of teachers to "teach to the test". It is the classic warning about taking care to pick what you measure carefully because it will drive behavior (sometimes the wrong behavior).

The story that I thought was most interesting was the one about the guy who quit his job to sell bagels to offices. Their assertion in the book is that there is no meaninful data on white collar crime(I am not sure that is true). The authors use the bagel man as a way to analyze this problem. Since he did business on the honor system and kept incredibly detailed records he was able to track company honesty. Some of the interetsting things he learned:

1. Weather: The worse the weather the more people cheat the bagel man.
2. Holidays: The Christmas holiday produces a 2% drop in payments.
3. Morale:The healthier the work environment the more honest they are.
4. Power:The higher up in the organization the person is the more likely they are to cheat.

I am interested in feedback:

1. Are you more inclined to cheat at work(through cutting out early or other slacker behavior) when your boss is a jerk?
2. What specific issues make it hardest to be honest at work?