7 Tips to Being Lean and Creating More Profits

Some obsessions are good for you, especially if you are a business owner—you should have a few of them. In my case, I love making my business and those of my clients as lean as possible.

I believe that being lean leads to lower overhead, which leads to a more competitive offer for our clients. If I’m not lean I have to charge for the waste somehow to stay in business or close my doors.

Waste is a major reason that businesses fall behind or even die an early death. Wasted inventory, wasted time, wasted conversations, wasted money, wasted effort,

WHAT A WASTE!

When Henry Ford came up with the assembly line for his Model T car, he conceptualized ‘continuous flow’— keeping production standards so tight that each stage of the process fit together with every other stage. Perfect harmony, with little to no waste—or so it was thought. Turns out, that’s only half the equation of ‘lean manufacturing’.

The problem with Ford’s process was that it was inflexible. A Model T assembly line could only produce a Model T because the point of the assembly lines was to produce the same thing over and over. The process didn’t easily allow for any modifications. So what did they end up with? Large inventories of unsold automobiles.

Fast forward about 50 years, when Taiichi Ohno of Toyota took Ford’s assembly line to a new level and corrected this problem by adding agility to the production. As author James Womack notes, Toyota leveraged this to great success, eventually emerging as one the most profitable manufacturing companies in the world.

My perspective in business and when dealing with vendors for example is simple; does what you sell help keep me lean? Many business owners tend to ignore this and ask “how much does it cost?” when in contrast I think what is initially of far greater importance is not the cost, it is the result.

The price is the price, and besides a few (fake) discounts, we really cannot change it. Unless you want to do business with a company that gives it away. And In that case I run away–if they’re doing that, they don’t know how to run a company and are more of a liability. They don’t charge enough to produce the result they promise.

When I interact with people and ask them about the technology in their business the response is often—”oh, we’re fine.” That raises a major red flag for me—here’s why:

For many companies with an ‘IT Guy’, things are not even close to the tip-top shape the business owner believes it to be, and quite far from being lean.

For example—your IT person installed some equipment, supposedly keeping you safe. You spent a thousand bucks on getting it installed and assumed that it was the best thing to get because he is the expert and you trust him. Then one day you find out all your data has been hijacked and you cannot access it without being forced to pay a hefty sum in a certain online currency to your new friend the hacker.

The problem with this model is that it lacks insight and proper planning, but even more importantly, the person installing it lacks the ability to understand what a lean solution means for your business.

So, the first step when working with clients is the birds-eye view—a careful analysis to spot waste and exactly what improvement is needed most. I start most of the time with assessing my client’s most important drivers—processes, services, equipment and people.

In my own business and for my clients, I look carefully at the risks we face and how what we have aligns with my big-picture goals for the next 1, 3, 5 and even 10 years. Once I understand those I can then make the problems visible and introduce the lean way.

If you are a small business owner, here are 7 tips of things you need to be considering:

Bandwidth Optimization

I have met with businesses whose bandwidth—75% of it—is taken up by distractions like streaming media, YouTube, Faceplace, Twitter and much more. Although it is not for every company, generally we advise to kill it at the source and eliminate by prevention, using the right tech. It sounds more complex than it is, and it is a low cost with MASSIVE impact on productivity and business risk.

Root Cause Analysis

People I interact with often think if a user has issues with technology, it’s a problem of intelligence. But more often the root cause is often just about education. A simple training in the form of a 1 hour Lunch-and-Learn can prevent many costly security breaches and cybercrime attacks. Would you pay $20 for a pizza if it can save you THOUSANDS in losses? I know I would.

Visibility & Insight

Use a technology scorecard for your business that, among many things, has ongoing asset management reports providing information on the life-cycle of your equipment so that you’re never caught off guard about product warranties, expirations, and items that may need replacing soon. Be proactive and save OR be reactive and pay DOUBLE or TRIPLE. Ever left the country and forgot something? You likely paid 2 times more than what you would have if it was not such an emergency.

Simplified Processes

Your data storage, email, telephony, software, internet, etc., — all of these can integrate with the same credentials so that you can access software, stored data and (archived) email no matter where it is located. If a person leaves, you only have a single account to disable, which again lowers your business risk. And don’t file every email in a folder by itself, use the power of search and stop wasting time. It is easier, faster and thus costs less.

Stop Duplicating Data

Get rid of duplication and data-overhead—when emailing internally, don’t forward the document. Just put it in a central shared locations and send a link. This way the file doesn’t get duplicated 400 times on the email server and again the backup.

Reduce Pointless Waiting

There are approximately 124,800 minutes of workable time in a 2080 hour year. If your employee has a NET cost of 50K a year your cost per minute is 40 cents. If you shave off 5 minute per work day over a year, you would save more than $500 a year. You can get a dual monitor setup for every single employee and still have money left for lunch, not to mention a happier workforce and better output.

Always Keep Improving

Lean gives priority to continuous improvements, big and small. The best tools for the job are always up to date and optimized for future growth. We don’t wait for things to fail, we get ahead of them, plan for them and strategize instead.



These are just a few small Lean improvements that your business (and your wallet) will thank you for.