How to reduce ‘wastage’ in your small business

I was recently introduced to the term “wastage” in the context of running a business, and it prompted me to analyse the areas of my business where I may be experiencing or even creating wastage. Wastage basically means any areas where you have “inefficiencies in processes or practices… which can erode a business’ profits, negatively affect productivity and efficiency, and detract from a business’ sustainability”.

I am particularly interested in measures to prevent erosion of my profits! You too? Well, I decided to focus on wastage in this week’s blog, to help you, my fellow business owners, find and reduce wastage in your business.

Me under the microscope

In analysing my business this week, I reviewed three things which I felt more directly affect my business profits: my revenue- versus non revenue-generating activities, my client profitability and finally how much time I spend on my business versus in my business.

1. Revenue- vs non revenue-generating activities

Early in my career, I developed (what I believe is) a good habit of keeping track of all my daily activities. It’s the only way I know to properly plan my days and then look back at the end of the each day and assess whether I achieved my plan. This week I went a step further. I reviewed all my work activities for the last month and then classified them into one of the following four buckets:

  • Client work
  • Prospecting, which includes any networking activities, generating leads and meetings with prospects
  • Marketing activities, such as working on my blog, newsletter, social media marketing
  • General business, including dealing with finances, training, admin, etc.

Below are my results for the last 4 weeks.

wastage-peer-business-consultingIn general, I am pretty happy with these percentages:

  • Time spent on revenue generating activities was about 80% versus 20% on general business (which doesn’t directly bring in revenue).
  • I would like to see a much higher percentage of time spent on client work (60-70%) but as I am a new business (8 months old), I appreciate that building up a portfolio of consistent client work takes time.
  • When I am not working on client projects, I am focussed on bringing in new business. I do this through prospecting activities (i.e. a lot of networking and some cold calling) and marketing activities (maintaining my website, regular blog posts and social media marketing). This way, I am always generating new leads, nurturing those leads and hopefully converting them into clients.


2. Client profitability

The next area I examined was the profitability of a recent client project that I completed. It was a pretty meaty project so a good one to use as an example. In this case, I charged by the hour however I provided an estimated total cost to the client at the beginning of the project. I reviewed the following:

  • Estimated number of hours prior to commencing the project
  • Actual hours spent on the project
  • Number of hours that I billed to the client. This should be the same as the actual hours but I don’t charge my clients for time spent travelling to their office or time spent generating quotes and invoices, for example.

In an ideal world, the above three numbers should be identical (or very close). When that happens, this means that you’ve made an accurate estimation upfront of your work effort and that you are billing the client for all (or most) of your time spent working on their account.

My (not-so-good) results were (which goes to show we can all stand to re-learn our lessons!):

  • My actual hours spent (including non-billable hours) were about 50% higher than the estimated hours. A good percentage is about 20%, so clearly I am above that threshold. For this particular client, I made it clear that the estimate was just that, so they did not have a problem that my estimate was too low. They also increased their scope a little during the project, which resulted in some of this deviation. But getting clear on your estimation process serves you well for your own planning and time management purposes as well, so it’s important to get this right.
  • My actual hours were around 20% higher than my billable hours.  This means that 20% of the time I was working on this project (including travelling to and from their offices, coordinating meetings, taking short phone calls and creating invoices) was not billed to the client. Clearly, there are some improvements I can make to my billing inclusions! These can include charging for travel time, building in an admin cost for things like meeting coordination and generating invoices, etc. and ensuring I charge for all phone calls regardless of how short they are.



3. Time spent in your business versus on your business

I’m almost sick of hearing this expression (it has been bandied around everywhere) but the premise is clear. You should ensure a good balance between time spent working in the business (i.e. delivering your products or services, dealing with customers, managing staff and handling the day-to-day operations) versus on the business (i.e. business planning, setting goals and thinking strategically).

I further analysed my “General business” time (refer above) to see how much of it was truly spent on the business. The truth is not that much. Most of that time was planning my daily work activities, managing my finances and reading/learning. But that’s OK because I have embedded my strategic work into my day-to-day work. This is how I recommend all business owners achieve the balance between in and on.

At the beginning of the year, I did a detailed review of Business Plan and my Sales and Marketing Plans (I had a strategy day). In those reviews, I set up my action list, which is now incorporated into my daily/weekly/monthly work activities. Not only that but I rely heavily on reminders in my calendar to regularly review specific aspects of my business plan in bite sized (1-2 hour) chunks. This makes it all much more doable and realistic as I try to juggle everything I need to as a small business owner.

In a nutshell

Wastage can mean so many things in business that it can become overwhelming just thinking about it. A good approach to is focus on areas of wastage that affect your bottom line, as I have above. That is, break down of work activities into revenue- versus non revenue-generating, client profitability and time spent on strategic work. This could uncover some interesting realisations for you and more importantly, could tell you right away where you could improve your business profits.

* Image sourced from Death to the Stock Photo.

Peer-Business-Consulting-Angeline-Zaghloul-5What did you think of this article? Post your comments and questions below. And if you found this useful, please share with your networks.

About the Author: Angeline Zaghloul is an expert in business strategy, client management and business processes, and is the Principal of Peer Business Consulting, a Sydney-based consultancy providing strategy and operations support to startups and SMEs. Angeline also publishes a weekly blog which provides research, advice and tips on key issues facing businesses.


  1. Find out what type of service such as advertising or hiring consultants or buying equipment works for your business to succeed and profit. Wishful thinking and the attitude of you know it all actually harms your business as you waste money, effort, time and resources which takes you backwards and many do that, even with proof and evidence they still think there way is better and the only way.

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