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In the present economic environment, many small businesses are in a difficult spot. For some, the pressures of the pandemic-driven recession have meant making drastic cutbacks simply to survive. For others, trying to outgrow the downturn has become the method of choice.
The trouble is, both of those approaches carry significant challenges for small businesses. For example, cutting back too much can leave a small business unable to meet its output goals. However, aiming for supercharged growth carries the risk of overextending your business’s finances at a risky time.
Thankfully, there’s a way for small businesses to reap the benefits of both strategies at the same time, while also minimising the risks and increasing the odds of success. They must embrace a new way of looking at their operations. They must apply lean operating principles to their business to become more efficient and increase output at the same time. Keep reading for our top five tips to weather the economic storm.
Reimagine Processes from the Customer’s POV
The first thing a business has to do to apply lean operating principles to their business is take a step back and look at things from a different perspective. More specifically, from the perspective of the customers that the business serves. The idea is to reorient the business’s focus towards business processes that deliver customer value. This reorientation process will help you uncover inefficiencies like outdated procedures and unnecessary steps.
The process works best when employees at every level are empowered to make changes to the way things are done. If an employee can identify a shortcut that makes their work faster without sacrificing results, let them implement it. And the same thing goes for management. If managers feel that they can get the same results with less direct oversight, reallocate their time to more productive activities.
Revamp Finance Processes
The next part of a business that can often use a lean makeover is its finance operations. This is because traditional finance methodologies often rely on cost accounting and similar practices, and those may not capture a true picture of a business operating under lean principles. They’re more suited to comparing direct costs in an apples-to-apples fashion. But when processes are oriented toward delivering value, cost becomes secondary.
For example, a traditional logistics business looking to finance a truck fleet would focus solely on finding cheap interest rates on any loan they’d consider taking on. But a lean business looking at truck loans might consider the value-added services their truck finance provider offers as part of any deal, especially if those services enhanced the value generated for customers. This is because lean accounting calls for a practice known as value stream mapping, which can fully reflect whole value chains rather than simple bottom-line costs.
Look for Opportunities to Automate
One of the key resource drains that affects small businesses is a need to devote manpower to repetitive tasks that are simple yet time-consuming. Every dollar paid to an employee engaged in those tasks is a dollar that could be better spent elsewhere. But it doesn’t have to stay that way.
Today, automation technologies make it possible to streamline processes. Investing in the right technologies is a smart use of business funds, especially in tough economic times. According to experts, business lending providers are now creating financial products aimed at underwriting such investments, so there’s no reason to hold off on going all-in on automation.
Adopt Lean Management Philosophies
Today, lean management philosophies lie at the heart of most management master’s degree programs. That’s because they’ve been found to encourage efficiency and eliminate waste. But small business owners don’t need a degree to implement lean management principles.
First, learning how to create and use Kanban boards to maintain a high degree of workflow visibility is something that managers at any level can do. Second, focusing on workflow continuity to make sure employees don’t run into bottlenecks or roadblocks in their work helps keep things running smoothly. And lastly, working to create a culture of continuous improvement makes sure that the business doesn’t rest on its laurels – and is always trying to do things better, faster, and cheaper.
As Efficiencies Are Achieved, Standardise
Once efforts to embrace lean operating principles start to bear fruit, it’s important to codify the new ways of doing things into standardised, documented procedures. This will make onboarding new employees easier. It also makes it possible to train cross-functional workers so they can pitch into multiple processes whenever needed.
But beyond that, establishing standardised procedures helps prevent backsliding into the business’s old ways of doing things. It provides a roadmap to the success that the new, more efficient processes drive, and serves as a useful measuring stick to gauge employee performance. In other words, documenting everything gives everyone a common knowledgebase to work from and a reference point to keep in sight as they work.
Ready to Thrive
By putting these lean operating principles to work, small businesses can cut costs and encourage growth at the same time. It’s a recipe for success in any economic conditions, but especially when there are significant economic headwinds. In this way, it’s not only possible to survive in a recession but to thrive as well. And as the uncertainty mounts, the one thing that’s clear is that small businesses – and businesses in general – can’t afford to let any opportunity to improve their operations pass them by. And because making the changes explained above is so easy to do, now they won’t have to.
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