How to Take Costs Out of Your Company and Run a Leaner Business
It is no surprise that traditional brick & mortar is in decline and margins are being squeezed. Now, more than ever, business owners have to focus on running leaner operations. If you’re a business owner, you’ve probably asked yourself “How do I reduce overhead while scaling my business?”
At our June breakfast, we had the opportunity to explore the topic along with our panelists Ian Farr (Whole Sale Innovations & Bimmian), Jeremy Potvin (World of Angus & Weed Box) and Lexi Miles (WAXON Wax Bar). Here are the main takeaways from the discussion:
DON’T WAIT FOR A CRISIS
Libby Wildman (Wildman & Associates), our moderator, kicked-off the chat with an important lesson for all business owners: Cost cutting should not be resorted to only in times of crisis. Cost cutting should be used more as a strategy and an opportunity to expand. People often think of cost cutting as their last possible course of action, but it shouldn’t be the case. We should always be looking at getting rid of anything that does not deliver value to the customer — in other words, getting rid of waste.
Furthermore, Ian pointed out that regardless of timing, there are always opportunities to make things better and more efficient. One of his tricks to find these efficiencies is to ask why 5 times. Each why should lead you to ask another why. Ultimately, the goal is to reach the core of the problem. Inefficiencies will be addressed, and once they’re eliminated, you will most likely impact other processes down the line.
MAP YOUR PROCESS
For Jeremy, encouraging advancement and constant improvement is simple. When they come up with a new product — they test everything — from figuring out how to sell it to how to distribute it. Once they figure out how everything works, they build process documents. The idea behind this is to allow everyone to see in detail what a process looks like in order to fully understand its mechanics. When people understand the whole picture, that’s where innovation can take place — that’s where they can say “there has to be a better way.”
Lexi attributes the success of her franchises to the disciplined use of processes. Given that control and brand consistency are important for her company, they measure everything in all processes. They do this in order to provide all franchise partners with a toolkit that will give them the visibility they need to manage better and run a good business. Franchising allows one to decrease overhead costs, for example, but this is only possible if the franchises run the business effectively.
BE FLEXIBLE IN YOUR METHODS
Whatever method you use to run a leaner business, allow yourself and your employees to make and learn from mistakes. Ian noted that, at his company, anyone is allowed to make a mistake in any way as long as they’re trying to benefit the company.
You don’t want to implement process documents? No problem — try making checklists instead! Do not be afraid of testing new things with your team, whether it’s working-from-home schedules, or new software for your business. Overtime, you will find the things that will work for you and you’ll be able to shave off seconds from certain tasks, find inefficiencies, and eliminate waste. Ultimately, you will be delivering what is the most important to your customer — value.