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Marginal gains and how they can change your life

Any small improvement in efficiency can make a difference to your business' end profit and the long-term success of your company.

So, as a business owner, you're constantly on the lookout for a chance to make a change that helps the business to function more effectively. That change needn't be a giant step forward; it could be one small improvement. But if you make a series of small step changes that have a positive impact, you can end up seeing a marked change in your performance.

And if we look to the world of sport, you can see how these 'marginal gains' can start to add up to take you from 'match fit' to being a world champion in your field.

What are marginal gains?

Dave Brailsford is the former performance director of British Cycling and now the general manager of Team Sky – and he's widely credited with single-handedly transforming the success of the British cycling team. Under his leadership, the British team went from never winning the Tour de France, to winning it three years in a row. They went from mediocrity, to topping the Olympic medal table three games in a row.

That's a pretty amazing change in performance – it's one of the most dramatic sustained turnarounds in the history of sport. And Dave (or Sir David, to give him his formal title) puts it all down to one very simple thing... he calls it 'marginal gains'.

In order to achieve these amazing goals, Dave looked at every element of the bike, the athlete and the events. This included ensuring that wheels were not even a fraction of a millimetre out of alignment, and painting the insides of the vans the team used to transport the bikes a bright white so that dust was easier to spot and eliminate.

The cyclists on the Tour De France had 21 overnight stops and it was essential that they had a good night's sleep and started the next day fresh. Each cyclist had their own mattress and pillow designed and shaped just for them. These were carried ahead of the cyclists and installed in the next hotel.

What we're talking about here is an almost forensic level of focus on the detail: a desire to examine every element of the cycling process and to look for the opportunities to make those little 'marginal gains' that give the team a competitive advantage.

How do marginal gains apply to your business?

In business, you can take this self-same approach and look for the marginal gains that will give your business a competitive edge over other companies.

If you monitor every element of your business performance, you can put strategies in place to improve each one by a small percentage. The cumulative effect of these marginal gains will have the same effect on a business as those marginal gains had in cycling – they'll put you that couple of steps ahead of the competition.

This is incredibly powerful when you're trading in a competitive market where any advantage can have a big impact on your potential sales and profitability.

Using your KPIs to make those gains

The first thing you'll need to do is set up some key performance indicators (KPIs).

These KPIs are used to track and measure your business information and give you the data you need to search for those areas where marginal gains are possible.

The first KPIs that we look at are what are called 'key predicative indicators' – the metrics that help you measure activity in the business. For example, if you're a roofing business, then these predictive indicators may be:

  • Efficiency of answering the telephone for enquiries
  • Number of quotes given
  • Number of quotes won

In this simple example, the first place to
achieve a marginal gain would be in taking the enquiries. If the roofer is working on a roof, it may not always be safe to answer the phone and so the potential customer telephones someone else. By engaging a telephone answering service, the roofer could make sure all enquiries are answered, resulting in more quotes – and so on.

That one change has a knock-on effect on the efficiency of the business, the number of quotes given and the number of quotes won – all by getting an answering service.

How Xero and CrunchBoards provide real-time data

The key to monitoring those KPIs is having up-to-date information to hand – and that means you need access to real-time data relating to your business activity.

Xero online accounting gives you a financial platform for your business that can record, track and measure your business data in an extremely straightforward way. Xero provides the real-time data that's needed to monitor your KPIs and to see the impact on performance.

And if you want to drill down into that data, the CrunchBoards cloud reporting solution provides a visual representation of the business's performance and can clearly show the areas where improvement is needed.

With CrunchBoards, you set up customised 'boards' for any area of the business and any KPIs. You tailor the data and how it's represented to fit the precise needs of your KPI reporting – and the boards will automatically update in real time as Xero is updated.

CrunchBoards doesn't just measure those financial KPIs; it can also incorporate non-financial information, the key predictive indicators, into the boards. A simple illustration would be that our roofer above could monitor his turnover against the number of telephone enquiries received.

Making a change to your business: and to your life

Can all of this do more than improve your business? Can it change your life?

Bespoke Accounting are members of AVN, a leading network of accountants. One of our fellow members has a small client – one man and a van – and he and his wife had been unable to adopt a child because their house was not considered suitable. By working with his AVN accountant to achieve the right marginal gains he was able to increase his profits, move house and adopt the child that he and his wife longed for.

Having a focus on gradually improving your performance really can make a difference – to your business, your own quality of life and to the service you provide to your customers.

Come and talk to us about setting up Xero and CrunchBoards for your business – and putting the metrics in place to track, measure and improve your own KPIs.

Get in touch and let's have a chat about making some marginal gain for your business.