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Effective Resource Management for Small Businesses

Updated: Apr 3, 2022

Something I firmly believe all small business owners should continuously focus on is resource management. Don’t get me wrong, great content, fantastic partnerships, fresh ideas, customer satisfaction, and everything in between are important, but if you don’t manage your resources carefully, you won’t see the returns you need to grow your business.

I felt the need to write about this because I had a conversation with two completely different business owners, from two completely different industries, at two completely different stages in their business growth, facing two different obstacles, but both solutions required a shift in the way they viewed their resources.

Effective Resource Management for Small Businesses | Zia Reddy

The Challenge: Scaling a service business.

The first business owner I spoke to is the head of a small creative agency that had reached a point where they wanted to start scaling their operations. Now, when it comes to a service business like a creative agency of that size, the income potential is generally limited to the number of billable hours available. The solution to their scaling problem might seem clear - just hire more creatives, because more people equals more hours, which results in more income. But, here’s the problem, agencies of their size generally lack the financial resources to simply hire new staff. They would need to generate more income to hire new staff, but to generate more income, they need to hire more staff. (See the chicken or egg situation here?) They could possibly look for an investor, but it’s a tedious process and not all business owners are too keen on letting go of equity. In the conversation, the owner also mentioned that they had a look at the number of hours they had available in a week and if they were to work on Saturdays, they would be able to add some more billable hours that would help in their scaling efforts. While I am a firm believer in working hard, I don’t subscribe to the whole “Entrepreneurs are willing to work 80 hours a week, to avoid working 40 hours a week” philosophy. While it is important to graft as a business owner, I believe that work-life balance is even more important.

So, here’s the summary of their situation:

  • There’s a need to grow the business.

  • They need to take on more clients to scale.

  • They lack the internal resources (billable hours) to add to their workload.

  • They lack the internal resources (finances) to address the shortage in internal resources.

  • The existing team is at capacity and cannot take on more work because burnout is more harmful to the business than the benefit derived from the extra income.

The solution.

Effectively and optimally using existing resources sometimes requires a radical shift in what those resources are used for. Understanding the required shift means that we need to consider what the risks associated with the use of that resource are, look at alternative ways of using that resource that present less of a risk, and respond accordingly.

What does effective resource management look like in this instance?

My suggestion to the owner of this creative agency was to empower the existing team members to take on the role of project manager, managing freelancers to whom work can be outsourced when required. In this way, the business benefits from the added available hours while the financial risk associated with adding more permanent staff to handle more work is mitigated. What’s more, even though this new approach would require a radical new way of working, the risk of burnout is also addressed because the available hours of the existing creative team are used more effectively.

The Challenge: Sales funnel optimization with limited resources.

The second business owner I spoke to is the owner of an educational stimulation program that has been around for just shy of 30 years. The challenge we discussed was about optimising their sales funnel, but the thing is, the conversation didn’t start out with the aim of addressing this challenge. The owner was talking to me about a new idea to nurture relationships that the business had built over the years. After explaining the intricacy and content-richness of this new idea, I asked the question “so, how does this help you achieve your business goals?” To which they had no answer.

Now, nurturing relationships is important in business, but as we know, small businesses have limited resources and when resources are spent on activities that do not help you achieve your goals, you are not using your resources effectively. One of the main goals for this small business is to optimise its sales funnel. To do this, they need to develop effective lead generation channels. This in and of itself requires substantial resources to achieve. But, here’s the problem, the relationships that they have built over the years do sometimes generate leads for them and the association made in the minds of the customer as a result of these relationships offers the business substantial clout in the industry.

So, here’s the summary of their situation:

  • They need to maintain relationships that they have built over the years.

  • They need to generate leads.

  • They need to optimise their sales funnel.

  • They have limited resources (time and finances) to dedicate to the above activities.

  • They cannot outsource either of the activities due to limited finances and nurturing relationships requiring a personal connection with the business.

The solution.

Small businesses should focus on achieving their goals and the allocation of resources should reflect that. This will require us to evaluate business activities, see which of these activities help us to better achieve our goals with the resources available and allocate our resources accordingly.

What does effective resource management look like in this instance?

My suggestion to the owner of this business was to look at their existing lead generation channels, determine the closing rate of each of these channels, rank them, and allocate resources accordingly. Optimising channels for lead generation is a topic on its own, but you see my point of making sure that your resources are allocated to what will help you best achieve your goals? To address the need for nurturing existing relationships, I challenged the owner to think of a way to do this that wouldn’t require the development of as much content as they had initially planned and to weigh up the effectiveness of quality interactions versus quantity interactions.

In summary.

Small businesses have resource constraints. It is part and parcel of what makes a small business a small business. Knowing how to effectively manage available resources will go a long way towards helping your business grow and weather the storms it will eventually come across. For these two businesses, effective resource management came in the form of a radical shift in what their existing resources were being used for and refocussing the allocation of their resources towards best achieving their goals.

My challenge to you is to look at what you are doing as a small business and ask yourself if you are effectively using the resources that you have available? If not, how can you better allocate your resources to better achieve your goals?


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