The core idea of a lean business is to maximise customer value and minimise waste; or in other words, create value for customers with fewer resources. In this way, operating a lean business is not only good for you but also for your customers, because by eliminating wasteful practices, you can focus on areas worth investment.
Here are five ways to apply lean business principles to your start-up or small business for that magic elixir of growth and sustainability.
#1. Identify value-add, value-waste and value-enable work
The first step is to identity the work that adds customer value and the work that does not (a.k.a. waste). This will draw attention to the areas that consume time and money and where you can better deploy, trim or eliminate your resources, assets and processes. As you start to identify excess you can simplify and streamline your work to eliminate value waste, focus on value add, and consider where you might want to invest in value enable, such as accounting, design, legal, human resources, etc (see 04 below).
Assessing and improving the value of the work on a daily basis can lead to improved productivity, cost savings and the potential for a more competitive market position as customer value becomes your consistent focus.
#2. Monitor your highest expenses
A small business’ highest expenses may include inventory, rent, employees and insurance (amongst many other items). Monitoring, controlling and optimising these costs can help to improve cash flow, which can then be channelled back into your business and invested in value-add or value-enable work.
In a lean business, inventory levels, for example, should be effectively managed to ensure you can satisfy demand without being left with excess stock. With inventory management and control software you can easily track inventory, monitor costs and align supply with demand to free up cash, minimise waste and even take advantage of seasonal supplier discounts.
#3. Know where to scrimp and where to splash
Monitoring expenses also applies to keeping operational overheads low. What office equipment, furnishings and resources really add value to your business and ultimately your customer? There are many cost-effective office solutions, including all-inclusive shared workspaces [Hyperlink to Desk Space], which are a much “leaner” option than renting and decking out your own office.
Once you’ve identified where to scrimp, identify where to splash that freed-up cash. Namely on the small and smart value-add areas, such as your website, employee training, research and development, marketing and promotion, etc.
#4. Focus on your strengths and outsource your weaknesses
Don’t waste time (and patience) – yours or employees – on areas that aren’t strengths, such as accounting, capital raising, design or legal stuff. By outsourcing them to an expert or specialist you can focus your time and effort on areas of strength not weakness. However, in doing so, ensure you clearly define the outsourced work to keep that process as lean as possible.
#5. Foster a “keep it lean” culture
By establishing a culture based on lean business principles your start up or small business will be consistently focused on streamlining processes, refining operations, minimising waste and creating value for your customers. Indeed the mindset of “continuous improvement” is empowering and encouraging and can be an underlying culture of successful small business or start up.
Keeping lean is a daily practice in order to align business operations with business goals. But based on common sense and a practical approach, keeping lean can help you achieve sustainability, growth and a more agile business.