How do you ensure that your accounting firm maximizes and then adequately manages your resources to meet client demands? If it’s your goal to grow your accounting firm, how do you successfully oversee your staff and which systems do you set up to assist you in reaching your objective?
The answer to these questions is found in understanding and implementing capacity management. In this post, we’ll discuss what capacity management is and how you can use it to maximize your firm’s output and get better at meeting demands, whether internal or external.
What is Capacity Management?
Capacity management is the process of ensuring that your accounting firm maximizes its output based on its level of input.
In business, capacity is often described as the maximum rate of achievable and sustainable output that an organization can reach. Managing this capacity is an essential practice for any organization that wishes to utilize all of its available resources.
The goal of any business is to take advantage of its readily available resources in order to meet the demands of its clients. Another, but arguably just as important goal is for the firm to maximize capacity without creating an excessive burden for its employees to shoulder. If a firm’s employees suffer a strain or eventually succumb to burnout, then the firm has not properly managed its resources – in this case, its human resources. Capacity management does not mean that a firm has exhausted its resources, but rather that it has used its resources efficiently and responsibly.
In order to effectively manage capacity, an accounting firm must commit to continuous evaluation and be willing to try new ideas and get rid of old processes that no longer serve its goals.
Why is Capacity Management a Top Priority for Accounting Firms?
Proper capacity management ensures that tasks, projects, and deliverables are completed on time and within budget. Profitability is an important component in capacity management. Because many businesses operate with a slim profit margin that can easily result in a loss if not managed properly, it is every business’ top priority to employ its limited resources effectively. This way, resources are not wasted due to oversight or underutilization.
Without effective capacity management, an accounting firm can suffer needlessly in many areas. Let’s take the area of employees, for example. If you do not properly manage your capacity, your employees may feel overworked, which can result in sloppy work, poor customer care, and disgruntledness. Your employees can also be underworked, which means that you will pay them more but you will get less in terms of the output you need to grow your firm. Neither option is sustainable for your business. Disgruntled employees leave and overworked employees often stick around but don’t help your firm reach its potential. That’s just one example.
Capacity management makes the most of your employees’ skills and time while also reducing employee attrition. In many instances, capacity management also reduces a firm’s need to hire more people. After designing a plan that works well with your current resources, you may find that you’re able to scale your firm (or meet other business objectives) without the need to hire more staff.
When you properly manage your firm’s capacity, you will also effectively balance your supply with the demands placed on you. But capacity management is not only for current needs. It also predicts future needs and incorporates key performance indicators (KPIs) to predict the future. Using data from the past, you can create accurate forecasts for every tracked KPI. This will allow you to plan for future resource demand and ensure that your business meets those needs when the time comes.
If you’re planning to transition into offering consultant or accounting advisory services, you will definitely need to develop a capacity management strategy.
Let’s take another look at employees, for a relevant example. Any accounting consultancy must work extra hard to reduce “waste” and ensure that its employees are being utilized for the skills they bring to the organization. “Waste” can often be defined as misusing your employees’ time by forcing them to do low-level tasks that do not generate real profit for your business. While your employees may be spending the majority of their day “working,” they’ll be doing busy work.
With proper capacity management, you can identify these low-level tasks and make a plan for offloading them. Busy work can often be automated or streamlined into a more efficient, less-involved process.
How Do You Plan for Capacity?
Let’s discuss practical ways to manage your accounting firm’s capacity.
Identify Your Processes
The first step is to take a look into every one of your current processes. Also, ask if the process is still relevant or if it’s no longer helpful to accomplish your task. Make this a team effort because your staff will likely have a different perspective than you.
Identify Bottlenecks in Your Processes
After identifying your processes, break each process down to the task level. Ask yourself and your team what currently works and what does not work. Find out if there are any parts of your process that may slow down your accounting firm workflow. Is there something you can do to remove that bottleneck? Can you automate it or approach the task from a different angle?
Create More Efficient Processes
The next step is to find better ways to accomplish your tasks and processes. Don’t keep the same process simply because it’s how you’ve always done it in your firm. If the process can be tweaked by implementing a new tool, do it, especially if it results in cost savings and reduced workload/mental burden to your employees.Don’t keep the same process simply because it’s how you’ve always done it in your firm. If the process can be tweaked by implementing a new tool, do it. Click To Tweet
Once you decide which processes stay and which go, you can start developing workflows. A workflow is a series of processes you take to reach a goal. A process is made up of tasks. A workflow is made up of processes. You can standardize your workflows to improve efficiency within your accounting firm. It will save time, effort, and possibly your budget.
Embrace Technology Tools
When you create tasks, processes, and workflows, you will undoubtedly use tools, such as accounting software. Accounting tools can help you automate repetitive tasks while also ensuring that you stay connected with your clients.
With the right accounting tool, you can ensure that you are maximizing all of your resources. For example, Mango Practice is an all-in-one accounting and project management software that allows firms to streamline workflows and reduce the time your employees spend on low-level tasks such as sending email reminders.
Hire As Appropriate
Two things can happen when you address your resource utilization. The first thing is that you may find that you don’t need to hire anyone else. Instead of hiring a new employee, you’re making better use of the human resources you currently have.
The second thing that can happen is that you find you actually do need to hire more people. And that’s not a bad thing. That means that you’ve evaluated your resources, discovered gaps, and now have clarity on how to move forward to build your firm successfully. You may also discover that effectively managing your firm’s capacity has attracted more clients to you. In this case, you’ll need to hire more people so that you don’t overload your current staff.
When hiring, be particular and only those who are able to fill in the gaps that you have. This will ensure minimum staff redundancy in the future.
Use the above tips to get started with capacity management but remember that it’s an ongoing process. You’ll never be done, but if you do it correctly, you’ll always grow.
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