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The Hidden Cost That Could Be Affecting Your Business

It has happened to the best of us, where work has not been completed or checked correctly by you or a staff member, resulting in minor errors. Typically, such errors are not discovered until this has already been sent to this client, which is often too late and the damage already done. This takes time and money to correct, as well as delicately managing the possible fallout with clients as a result, which is never a nice experience for you or your clients.

From working in the business environment and with clients you will no doubt know that time is money, so every time these minor errors occur this is potentially absorbing the profitability of your business. This hidden cost is called the ‘cost of rework’ and many small business owners may not even be fully aware of the extent of damage this can cause to their business.

The cost of ‘rework’ is related to work mistakes and not being thorough enough at the first time of asking. There are a multitude of reasons why this can happen including inadequate upfront scoping and planning, poor quality staff training and internal processes, a lack of attention to the detail and then the simpler just being careless due to being rushed. It really does amaze me the amount of small business owners who I meet who do not even have awareness of the issue of ‘rework’ and how this can impact their business.

Excessive levels or consistent ‘rework’ can also result in numerous consequences for businesses. As well as the standard impact on profitability, rework can also create a bad image of you and your business through the client’s eyes. This could be forgiven on the odd occasion, but if this was a consistent occurrence, clients may start to question the quality and integrity of the product or service you are providing them. They may even begin to wonder if they can rely on what you produce for them for the future, and even whether they can rely on you and your business as a whole.

Whenever something has to be re-worked, no matter how small the individual mistake, there is almost certainly a time cost associated with this – whether it is your own time or your staff’s. It is highly unlikely that such extra time will be chargeable to the client, and if so I’m sure they will not appreciate you charging them to effectively pay for your inefficiencies and mistakes. Such behaviour could soon result in your clients looking else where for the product or service you are supplying them. It is important to remember that these are your mistakes, and it is your responsibility to rectify them.

Despite this, there are practices you can put into place that can ensure you to significantly minimise the cost of rework on your business. Due to human error, it is unlikely that you will be able to eradicate this from your business entirely; these practices should mean you have all-important control over this. It is important to act quickly on this issue, as any improvements you implement could make an immediate positive impact to your business as well as its profitability.

Top tips for reducing the impact of ‘rework’ in your business:

  1. Ensure there are proofing and checking processes in place to establish that any work is done to the highest standard at the first time of asking. Checklists and stages are a great way to ensure consistency and sift out any potential errors.
  2. Fully embrace the need for technology – this makes your business more efficient and reduces the costs that can in turn enhance profits.
  3. Realise the power of systemisation. Try to reduce the risk of human error as this is the greatest contributing factor resulting in rework being necessary.
  4. Document processes thoroughly and adequately train any staff you have.
  5. Map the cost of ‘rework’ in your business on an individual basis with each client. What’s not mapped cannot be changed and improved.

An adapted extract from ‘The Profitable Professional’ (£14.99, Profit In Focus) by Kelly Clifford.

About the Author

Kelly Clifford is a profit specialist and the author of ‘The Profitable Professional’. He is the founder of Profit in Focus and on a mission to help businesses to profitably THRIVE. Get a FREE preview of his book by clicking here