Budgeting can be a painful experience for a middle market company. There is enough scale of business to justify many initiatives, yet resources are far less abundant than at a major corporation. Smart budgeting, however, is certainly achievable in the midmarket and can become an integral tool to create efficiency and even free up extra money and time to help grow your business.
Here are five areas to consider adjusting your budget. These modifications should save far more than they cost to implement, and all are well tailored to the needs and potentials of a middle market company.
Document Management
Ever get tired of all the paper that needs filing? Document management can become a great money saver and efficiency booster. I've spoken with multiple middle market companies in the past specifically about their implementation of systems to scan all paper documents into electronic form and then manage all the files on computers. Everything on a piece of paper — policies, order forms, records of all types — was replaced by its digital equivalent.
Efficiency gets a major boost when all documents are accessible by multiple staff members at the same time, so employees don't have to fight over papers when they both need to use them. Monetary savings are threefold: the flow of business processes becomes more automated, employees spend less time searching for documents, and businesses can jettison those pesky, space-filling filing cabinets. Companies now have the room to make better use of additional space and reduce overhead.
Invest in New Business Tools
New business tools can offer key advantages and opportunities for middle market companies. Many have benefited from cloud computing systems such as Salesforce.com's hosted customer-relationship-management software. I've spoken with some companies that wanted to make use of mobile devices and realized that they needed a cloud-hosted service that could manage the corporate data contained on those smartphones and tablets. Not only could the IT people block apps that were considered a problem, but data could be wiped remotely in case an employee lost a device. You can get managed e-mail software and make use of applications from Microsoft Office to Adobe for graphics, video, and web design.
There are even greater possibilities in adopting advanced manufacturing technologies if your company has a factory. According to research by the National Center for the Middle Market, companies that use advanced manufacturing techniques reported a twenty percent increase in profitability over the past five years while growing headcount at about the same rate as other manufacturers.
Training
Middle market companies face a skills gap. For example, manufacturers, especially those using the advanced technologies that they need to be competitive in a global market, find that many potential employees don't have the knowledge and experience necessary for certain positions. Even high-tech companies have found that people right out of college often are missing out on critical skills that are necessary for the jobs they're most qualified for.
When employees don't have the necessary skills or if you can't fill jobs, your company's success is hampered. Training is a smart way of addressing the skills gap. By using a combination of in-house training, internships, mentorships, and other programs, you can get people up to speed. Ideally, any costs of training will still offer a great return on investment in the future.
For example, David W. Davis, president and chief operating officer of New York-based Simmons Machine Tool, partners with Hudson Valley Community College, where the mid-sized firm provides scholarships to attract students to the advanced manufacturing technology program.
Upgrade Computers
This is advice that IT experts have handed out for years. There's a good chance that your company's PCs and laptops are underpowered. Systems may come with lower amounts of memory or slower hard drives, particularly if the company tried to save some money and didn't benefit from any discounts that big enterprises often command. Inadequate hardware can have a significant effect on productivity. Everything from normal business applications to browsers are slowed down as a result.
Depending on the age of your computer systems, you might need a full replacement. Then again, it could be that a simple upgrade will help immensely. To relate a personal story, one of the laptops owned by my consulting business is three years old and has been increasingly creaking along. We checked and found that it came with only three gigabytes of RAM but had room for eight. An investment of less than $100 and five minutes of work increased speed by at least a third of what the system was running at before. Instead of waiting around during lengthy load times, a user can get more a lot more done. This is the type of investment that can literally pay for itself in a day or two due to the increased productivity.
Distribute Time-Management Systems
Years ago when I started in management at a middle market company, I had never before been responsible for multiple people and the high number of projects that were put in front of me. Keeping on top of it all was difficult. And then one day, when chatting with the head of HR, I noticed a time management system and planner. I asked if it worked and she said, "If you'll use it, go ahead and take it."
I did, and things were never the same. Using proven principles and an existing system for implementing them, I quickly got ahead of everything that needed to be done. I then ordered systems for everyone in my department and insisted that they all use them. Within a short amount of time, we were able to handle a big expansion in business without additional headcount, and I was able to hold expenses down five percent below budgeted levels. Focus on time management, including training on how to properly use a system, and you'll be amazed at the benefits that your company incurs.
Erik Sherman is an NCMM contributor and author whose work has appeared in such publications as The Wall Street Journal The New York Times Magazine Newsweek, the Financial Times Chief Executive Inc., and Fortune. He also blogs for CBS MoneyWatch. Sherman has extensive experience in corporate communications consulting and is the author or co-author of 10 books. Follow him on Twitter.