If I had a dollar for every company I’ve seen burn through resources and scramble to get more resources…
You’re likely familiar with the concept of having to spend money to make money. Many entrepreneurs take this to heart. They don’t see a way to grow beyond scaling across the board.
Especially in times like these, when companies aren’t quite sure where the next dollar will come from, that’s not the smartest motto to live by.
Most of these companies are focused on the wrong metric. You see, leaders often focus on increasing revenue when, in reality, the goal is to increase profits. They think one goes in hand with the other (more revenue = more profit), but that’s not necessarily the case.
The following approach will challenge your notions about profit and scaling, and help you bring in more money without spending more.
The Principles of Lean Operations
Lean Operations, or lean project management, is a set of principles that focuses on increasing the value for the customer while making the most efficient use of resources.
Lean project management is part of a larger set of practices known as continuous improvement, or Kaizen. Over the decades, continuous improvement has evolved. But the main philosophy remains — small actions that compound to provide great results. This is the polar opposite of what the business world has morphed into — go big or go home —, which is exactly why it can lead you to achieve what you’ve been unable to do thus far.
At its core, lean operations allow you to optimize how you invest your valuable resources (time, money, talent, and materials) to provide the best possible results to your customers at a lower cost of operations.
There are project management methodologies and established frameworks to implement Kaizen in your organization. But I want to focus on how to improve the existing areas of your business in a practical, sustainable way.
Implementing Lean Operations
As I briefly touched on in the introduction, many entrepreneurs focus on the wrong metric when it comes to the financial side of their business. Of course, you need to track revenue in order to know how your business is doing. But most importantly, you need to know how much of that revenue is staying with you. Many businesses, especially (but not only) startups, burn through cash in an effort to grow as quickly as they can, but this isn’t sustainable long term. Instead, you can devise a strategy that makes good use of existing resources, runs effective processes, and delivers the highest standards while reducing your operational costs.
Use these four steps to get started.
The first step to streamlining your business is to evaluate what you’re currently doing. Many times, we operate a certain way out of habit. Instead, I invite you to be intentional about your allocation of resources by taking a close look at your processes.
There are countless methods to evaluate your business’s health. But the main goal is to see a full picture of your processes. From there, you will be able to analyze what is essential, nice-to-have, or unnecessary.
The evaluation step gave you the full picture of your business’s processes. Next, it’s time to remove anything unnecessary and simplify your operations. Lean Six Sigma, a lean project management methodology, categorizes wastes into eight buckets:
- Non-utilized talent.
- Extra processing.
Removing these eight wastes frees up your team’s time and resources to focus on the real, value-adding areas of your business.
Technology has made it possible to automate countless tasks your team used to perform manually. And it is not as complicated as you may believe.
Tools like Asana, Slack, Notion, HubSpot and Zapier create handy workflows that can save you hours of work each week, not to mention the fact that the output will be seamless and provide a stellar experience to your customers. In fact, there’s a whole field of technology dedicated to providing stellar customer experiences by automating sales and marketing: Revenue Operations, or RevOps, is a business function that automates the processes that make up the customer journey, from marketing to customer service, to make scaling possible for teams of all sizes.
A core principle of Lean Operations is maximizing value. Once you take a close look at your business’s workings, you’re likely going to find tasks, processes, and perhaps even products that represent a cost in your operations but add no value. These are the areas you’ll need to remove to decrease costs (thus, increasing profit). It may seem difficult, but if a certain task doesn’t represent value to your customers or team, why waste resources on it?
Lean Operations Transform Your Organization
It may seem obvious when you think about it. But in reality, many leaders fail to connect lower costs with increased profit because they focus on more, more, more. As you see, doing more doesn’t necessarily translate into making more. On the contrary, focusing on a few core processes and activities that drive the most value (instead of diluting your efforts) is the key to increasing your profit.
I have had the honor to work with leaders in some of the largest organizations in the country. Are you next? Book a consultation now to learn more about the processes and technology that can boost your profit and allow you to grow with ease.