How to Implement a Lean Business Approach

Taking a lean approach to business has become a hot topic over recent years, but what does it actually mean? As you might guess, it entails trimming down on wasteful expenditure and costs that don’t result in more revenue or a better experience for your customers.

It means isolating and cutting down on (or getting rid entirely) of the expenses that aren’t directly helping your business grow, so you can better direct your resources to the things that will.

It can be a massively rewarding undertaking for any size business – and if you’re keen to put it into practice, we’ve put together a few key areas to get you started.

  1. Isolate Your Most And Least Profitable Products Or Services

While you might think that leaning your business only involves finding out where you’re wasting money, it’s just as important to understand what you’re doing right. This means understanding just how profitable each service or product you offer really is – which in turn means understanding how much they cost you to provide. This includes the salaries of employees required to provide the service, the cost of running any associated equipment, any raw materials or supplies required, etc.

In running the numbers, you might find that something you assumed was very profitable is actually not the cash cow you thought it was, and a service you’d seen as a bit of a chore to provide actually costs you very little you to provide.

You just can’t be sure until you have the figures in front of you. Once you do, it becomes clear where you should be expanding your marketing budget, which services or products you should be phasing out, or where there might be opportunities you’ve been missing out on.

  1. Make A List Of All Your Expenses So You Can Shop For Cheaper Alternatives

There are many expenses your company just can’t run without, but that doesn’t mean there aren’t more cost-effective ways of achieving the same result.

  • When was the last time you shopped around for a cheaper telephony system or stationery provider?
  • Are you using the most appropriate bank account or are you paying fees for services you never use?
  • Could your on-the-road sales staff be using cheaper cellphone contracts?

Even with services where there might seem like there’s no other option, take your water and lights account for example, there are now companies out there who will actually liaise with the authorities on your behalf to reduce your monthly municipal bills. Every company is different, but one thing remains the same – you can only find areas where costs can be trimmed if you go through one by one and assess them with an open mind.

  1. Assess How your Employees Are Spending Their Time

Of course, it’s not just where you’re spending money that’s important to leaning your business, but also how you’re spending your time. If most of your employees’ days are taken up with administrative tasks that admittedly have to be done, but don’t actually result in growth, it’s worth looking at ways these tasks can be sped up or automated.

It might be investing in software (or simply taking the time to look for a free program) or changing the office or warehouse layout so people aren’t traveling unnecessary distances between stations. Make sure to get your employees feedback on this, as they are far more likely to be aware of bottlenecks and constraints on the ground.

Sometimes it’s not even that processes are inefficient, but that your staff just isn’t motivated to get them out of the way quickly and focus on something else. The best way to get them to do so is incentivize them.

It could be setting a weekly target and rewarding them with a pizza party on Friday afternoon if they meet it, letting them go home early if they’ve accomplished all their tasks for the day, or a monetary reward for bringing in a new client or suggesting a clever cost-cutting measure.

If you make sure there’s something in it for them, it’s just human nature that they’ll try that much harder for you.

  1. Keep The Momentum Going

Leaning your business is not a once-off process. As you take on additional staff, offer new products or services, or simply start to fall back into old habits, inefficiencies start creeping in again.

Set yourself a goal of doing a thorough appraisal every three months or at least twice a year, and make sure you stick to it.

It might seem a little tedious, but you’ll be rewarded with a clearer picture of where and how your company can grow, better profits and a healthier bottom line, and more satisfied customers – and isn’t that what it’s all about?

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