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Becoming Succession Ready: Operational Bottlenecks

Updated: Apr 11, 2022

When you contemplate your practice succession, you will have to consider and review many aspects of your practice.

One common issue that may impact your practice on different levels is operational bottlenecks, which can genuinely have a negative impact on revenue, operating costs, profitability, and overall practice value.

Your business profitability is heavily dependent on your operational efficiency.

Operational bottlenecks constrict your business processes whereby workflow is held up or delayed. If you have bottlenecks in your practice, your business productivity and financial performance are likely impacted.

Some of the key business impacts of bottlenecks are:

  • Financial impact: Bottlenecks can decrease revenue, increase expenses, and ultimately reduce profitability. Workflow can become constricted due to some inefficiencies and low productivity bottlenecks. These can all significantly impact revenue. Additional costs can come from re-handling work from staff, and it can come from opportunity costs of not completing more work due to delays from bottlenecks. All these different issues can flow through and negatively impact practice profitability.

  • Client satisfaction: Bottlenecks can cause delays in completing work which can lead to client dissatisfaction. A client may choose to take their business elsewhere if the dissatisfaction level is high enough. Delays in completing work may signal to clients that you have too much work, and this might cause a client to stop referring a friend or colleague.

  • Staff morale: Bottlenecks can lead to a range of staff frustrations where individuals lose the ability to meet deadlines and service expectations. The flow-on effect can reduce productivity, lower job satisfaction and ultimately, higher staff turnover.

Some examples of common bottlenecks in practice are:

  • Quality review: Practices will often have a Partner/Principal reviewing all completed work before jobs are finalised and the invoices are issued. There is a bottleneck if there is a build-up of jobs for review.

  • Timesheet accountability: Where a team member is continually late in submitting their timesheets for client work, it may create a bottleneck for invoicing clients. The impact on cash flow can be significant for a practice.

  • Pricing work: Some practices will restrict the pricing of new work to a key person (perhaps a partner or principal). This can lead to bottleneck issues and have flow-on effects across the business.

Reducing the impact of bottlenecks will improve the productivity and workflow across your practice and lead to more positive outcomes through your practice succession.

Some of the more common causes of bottlenecks are:

  • Practitioner’s desire to maintain control and subsequently not able to delegate effectively

  • Lack of resources

  • Ineffective systems

  • Trust issues within the business

  • Having the right skillsets in place across the business

  • Performance and productivity issues within the business.

There are many ways to identify bottlenecks in your business, from time audit to simply observing when your practice is under deadline pressure. However, the most straightforward approach for most firms is just to ask your team, as typically, they will know where the bottlenecks are in your business. In addition, your staff will probably have some good ideas on how to resolve them if they are given a chance. Another simple method is to observe when your practice is under deadline pressure – what are the reasons?

Common solutions to bottlenecks might be:

  • Better systems

  • Additional training and development

  • Additional resources

  • Workflow automation

  • Better delegation

  • More aligned business management and leadership.

Operational bottlenecks can significantly impact a business, but with the right approach, they can be identified and eliminated, which will positively impact the future value of your business during your practice succession.



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