When is the right time to automate your business

When to Consider Automation

Lots of business owners reach out to me wondering when it's the right time to start automating their operations. I always tell them the magic starts when your daily business tasks are like working on an assembly line. Each day, you perform the same actions, in the same order, with the same tools. Everything is highly predictable, and each task is a replica of the one before it. Just as assembly lines are optimized by machines to increase efficiency and consistency, your business processes can similarly benefit from automation when they reach this level of repetition. How much time you should invest in automating depends on how often you perform these tasks.

According to XKCD: If you do a task several times a day, you can spend some time making it quicker. The idea is to only spend as much time improving it as you'll save over five years.

This means if you do something every day and want to cut it down by a minute, you can afford to spend a whole day making those tweaks, and you’ll break even on time saved over five years. If you’re doing it five times a day, it might be worth it to spend up to six days to get it faster. But if it’s a once-a-month task, don’t spend more than an hour trying to speed it up—it’s just not worth it.

For an individual, the thought of spending an entire day just to save a few minutes over the next five years might not seem like the best use of time. However, in a business context, where minor inefficiencies can ripple across dozens or hundreds of employees multiple times daily, the scenario changes dramatically.

Let’s break it down for the business world:

1 minute/event * 1 event/person/day * 1 person * 240 work days/year * 1 year to positive ROI = 240 minutes = 4 hours

You might think saving four hours a year per person isn't huge, but spread that across 100 people, and you're talking about a real difference

And if you consider the financial side of things, the numbers are quite telling. With the average annual wage in the U.S. at $59,428 (according to Forbes), an employee wasting four hours per workday on inefficient tasks could end up costing the organization over $27,428 each year. For an organization of 100 employees, this expense could skyrocket to more than $2.74 million.

That’s a lot of resources that could be shifted towards more valuable work with the right automation setup. Now, how can we go more granular and identify what we can automate per process? Here's what I use and recommend:

Step 1: Break apart every process into steps

To figure out what you can automate, you've got to understand what's happening with your current processes. Break down each task in your organization into smaller steps. Sketch a flowchart using a digital whiteboard tool like Miro, or use pen and paper to map everything out so you can get a bird's-eye view of how everything works.

How?

• Pinpoint the processes you want to assess.
• Detail all the steps within each process.
• Assign who is responsible for each step.
• List the tools needed for each process.

Step 2: Calculate the cost of running each process.

Once you've outlined all the processes, the next step is to figure out how much each one is costing you. Let's break it down using time as our unit.

How?

• Note down the time it takes to complete each process once.
• Estimate how often and over what period (e.g. 7 times a week).
• Normalize the outcome for easy process comparison (like specifying it in monthly hour terms)

Step 3: Estimate how much of the workload could be automated

Now that you've got all the process details and time metrics assess the potential for automation. Take a close look at each step and pinpoint tasks that repeat regularly and are easy to predict. These are the tasks that are perfect for automation. Here are a couple of them

• Data entry: completing forms, such as an onboarding form for a new team member, where this information goes into multiple tools.
• Predefined messages: automatic notifications and reminders. Automatic notifications and reminders, such as the anniversary of a team, are sent to a Slack channel for the entire company to view.
• Initiating Actions in other systems: for example, changing a project status in Notion and creating a folder in Google Drive.

How?

• Determine the portion of process time that would be eliminated through automation.
• Multiply this percentage by the result from step 2 to calculate the total time saved.

Step 4: Calculate ROI

Lastly, determine the break-even point and expected return on investment (ROI) for implementing the automation. Consider the time and resources required for setup, balanced against the time saved by automation.

How?

Break-even Point (in months) = Implementation Time / Total Time Saved * Month

After the break-even point, the automation starts providing a positive ROI.

Let’s do a real example

Let's streamline the process of managing new customer inquiries through automation. Imagine a scenario where customers reach out to your business through a simple online form. Once submitted, they instantly receive personalized emails guiding them through the next steps, whether it's a thank-you note or detailed information on services.

Behind the scenes, as inquiries come in, your system automatically alerts your team via Slack and updates your project database in Notion. This ensures everyone stays in the loop and can promptly engage with new clients.

Now, let's break down the ROI calculation:

Step 4: Calculate ROI

• Implementation time for automation: 30 hours
• Break-even Point (in months) = 30 hours / 14 hours saved per month ≈ 2.14 months
• After approximately 2.14 months, the automation starts providing a positive ROI.

This setup not only saves your team more time from having to respond to each initial inquiry manually but also ensures potential clients feel taken care of immediately. It’s a win-win: they get fast, relevant information, and your team frees up time to focus on the parts of your business that truly need their attention, such as personalized tasks that require human insight and interaction.

For instance, providing personalized guidance and recommendations to the client on project implementation and execution.

Keep optimizing workflows

While not every aspect of your business can be automated, there are likely significant areas where automation could greatly benefit you.

So, next time you're debating if you should automate tasks like updating customer contact protocols or exploring new project management tools—and you find yourself wondering, "Is it worth it?"—the answer is likely yes, even for a small team.

And if you're feeling unsure or overwhelmed by the process, let's chat and explore how we can lend a hand.