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Small Business Owners: Eliminating Organizational Waste to Increase Profits

Wednesday, August 16th, 2017

You’ve heard it said often… Management can be broken down like this; eliminate, automate, delegate. You must always eliminate anything (and everything) that is not working, is wasteful, too costly, has no return on investment (ROI), and is not making the right kind of progress for your business.

Automate everything you can. This includes client reminders, billing, marketing, promotions, follow-ups, etc.

Delegation is REALLY important, and most often not done. It’s not done enough because we (you, me and most everyone) has a hard time “letting go.” Basically, we’re control freaks. You must determine your value per hour and NEVER do work that is below that pay level. Begin by delegating (outsourcing) all the things you loath.

It will instantly free your time for doing “HUBU” – your Highest Use and Best Use of your time to attract the next big client.

No one talks about how to eliminate unproductive routines, corporate bureaucracy and ‘administration trivia’ that kills ambition and sap energy for far too many employees. Organizational Drag is demoralizing for employees and a waste for companies, which badly need the full energy and commitment of all their workers to keep or make the business profitable.

No one talks about how to evaluate the true causes of organizational drag — all the practices, procedures and structures that waste time and limit output — not just the symptoms. The symptoms may seem minor annoyances and inconveniences that could be wiped out without much effort – too many process steps to get orders out, nonproductive meetings, meaningless goals, and time wasted on work that no one will even care about.

But those symptoms stem from fundamental problems. Companies wind up in trouble and squander the time, talent and energy of their workforce when they lose focus, spend money on things that don’t make a difference to employees or the future of the business, and use operating models that are out of whack.

Below are some areas that waste can be eliminated from an organization or restructured to help it to become more profitable.

• Board of Directors — being complacent and procrastinating on leadership, governance and compliance issues. Also, delaying or distorting strategic decisions that overlook waste and high costs, hastily conceived and harmful cost reductions, missed new product and business development opportunities and poor long-term investments that destroys shareholder value(profits).

• President – wasted authority, responsibility, ability, talent, technology and knowledge by spending to little time on ‘strategic issues/vision’ and ‘operational improvements strategy’ by accepting positions work on multiple boards that are not relevant to the company but provide networking and resume building opportunities for them. Not executing plans that improve shareholder value(profits).

• Administration (wasted efforts) — outdated technology, lack of current policies and procedures, poor tracking of costs, expenses, lost files, inadequate reports, inefficient ordering methods, no competitive bidding, facilities inefficient for operations and employees mindset of ‘we know what we are doing’. Senior executives having too many meetings that have little or no direct impact on company value (profits).

• Human Resources – Poor Employee Handbook, Ambiguous Employee Responsibilities/ Inadequate Job Descriptions, Irregular Employee Evaluations, Outdated Employee Benefits, Poor job training, high employee turnover and improper employee tracking, record keeping systems and the ‘don’t rock the boat’ mentality.

• Finance/Accounting (wasted profits) — credit losses, poor refund/returns tracking system, poor budgeting (profit planning system), Excessive Expenses, Slow Collections from current/former customers, delayed invoicing, inefficient record keeping (inventory/order management) and idle money

• Sales (wasted business opportunity) — neglected customers, uncalled prospects, lack of sales, calls on unqualified prospects, unsatisfied customers, high pressure sales tactics, rash promises and out-moded compensation structures

• Marketing Communications (wasted actions) — executing old marketing plan (targeting wrong customer audience), ineffective advertising, no publicity, lacks ROI measurement, poor coordination with other internal departments, outdated marketing material, outdated marketing message, no coordinated social media marketing presence, uninformed about company plans, internal employee communications lacks credibility and the ‘they can’t handle the truth’ mentality by senior management

• Operations (wasted products/services) – unused capacity, wasted labor, poor training, absenteeism, slow work pace, idle employees, spoiled work, out-dated methods and equipment.

• Ownership (wasted investment) – no profit on investment and the it’s a ‘write off’ mentality.

No one shows you how to attack the root causes of organizational drag listed above, which allows companies to eliminate unnecessary work, reenergize the workforce and at the same time, put the business on a better course. Making the necessary improvements allows you to ‘raise the bar’ in the organization by following the three R’s.

• Refocus on strategic priorities

• Resets the budgets

• Redesign the operating model

Refocus on strategic priorities

Refocus the organization on the most important business units, customer segments and geographies in which the company has a repeatable formula for growth and a ‘right to win’.

A. Within business units, eliminate any sources of profitless volume and products in no growth markets.

1. Look closely, company may have stretched their brands and used product portfolios to customers and market in which they are undifferentiated and profits are weak. This contributes to drag as well as costs that rob resources from better and potentially, more profitable ideas.

Reset the Budgets

How companies allocate money can contribute to organizational drag by keeping nonessential work going on. But it is not easy to make the tough decisions to defund.

I recommend profit planning based on zero-based budgeting and planning to make the choices clearer.

This information can be configured and stored in quickbooks.

A zero-based budgeting and planning process using stretch targets challenges conventional thinking and brings forth bolder ideas.

Redesign the Operating Model

After streamlined portfolio and reset budgets, it is important to redesign the operating model —- that is, the way the company is organized to deliver on its strategy. Thinking ‘customer-back’ or ‘frontline-back’ provides lens to eliminate work. Just ask: How does this activity help to serve the customer better? Or How does this activity or information serve the internal stakeholders better? —- Companies need to look at inefficiencies cross-functional, cross-geographical or cross-business unit activities, where no executive or team has any account activity.

Assess your current state business operating model. Then identify the waste in your operations top to bottom. By identifying by the seven wastes of lean which provide a lens and a language to identify waste in your own work. Ask yourself these questions:

Transportation: How many handoffs do I have in my work?

Inventory: How big is my queue of work tasks?

Motion: How much time do I spend searching for information?

Waiting: Does my work sit idle waiting for other tasks or information?

Overproduction: Do I perform some tasks long before they are needed, while other tasks are late?

Overprocessing: Do I do more than is necessary, such as three-paragraph emails where one sentence will suffice?

Defects: Do I have tasks I must rework?

Keep a list of what you are looking for, and make notes when you observe those specific instances. Identify the cause of that waste. You aren’t going to eliminate everything, and certainly not all at once. But if you have multiple observations, you can make choices about the best opportunity to improve that increases profitability.

The idea of categorizing seven wastes is credited to Engineer Taiichi Ohno, the father of the Toyota Production System (TPS). Although the classifications were intended to improve manufacturing, they can be adapted for most types of workplaces.

The following are the seven wastes, as categorized by Taiichi Ohno:

• Overproduction — Manufacture of products in advance or in excess of demand wastes money, time and space.

• Waiting — Processes are ineffective and time is wasted when one process waits to begin while another finishes. Instead, the flow of operations should be smooth and continuous. According to some estimates, as much as 99 percent of a product’s time in manufacture is actually spent waiting.

• Transportation — Moving a product between manufacturing processes adds no value, is expensive and can cause damage or product deterioration.

• Inappropriate processing — Overly elaborate and expensive equipment is wasteful if simpler machinery would work as well.

• Excessive inventory – This wastes resources through costs of storage and maintenance.

• Unnecessary motion — Resources are wasted when workers have to bend, reach or walk distances to do their jobs. Workplace ergonomics assessment should be conducted to design a more efficient environment.

• Defects — Quarantining defective inventory takes time and costs money.

Since the categories of waste were established, others have been proposed for addition, including:

• Underutilization of employee skills — Although employees are typically hired for a specific skill set, they always bring other skills and insights to the workplace that should be acknowledged and utilized.

• Unsafe workplaces and environments — Employee accidents and health issues as a result of unsafe working conditions waste resources.

• Lack of information or sharing of information — Research and communication are essential to keep operations working to capacity.

• Equipment breakdown — Poorly maintained equipment can result in damage and cost resources of both time and money.

After you have identified and categorized wasteful business practices/process areas in business units that need and can be resolved. Develop specific solutions for specific waste instances. Don’t try to eliminate waste in broad themes.

By identifying, improving and eliminating wasteful areas throughout the organization that decrease profitability. A business owner can increase their ‘profits’ on the bottom line in a good or bad economy.

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How to Playfully Create Business Profit

Monday, January 9th, 2017

There is one capital activity that can yield you out of business acutely fast and that is the activity of competition. I can candidly acquaint you that if I aboriginal started off in business, I spent a lot of time surfing through the Internet account newsletters of added association who were out there accomplishing plan that was agnate to myself. The aberration was not the researching; the aberration was not the account and not even just the witnessing or acknowledging what others in my breadth were doing; the aberration was the activity and the activity that it generated in me.

That activity and activity was actual closed. As anon as I saw something that somebody abroad was doing, it was like a artful through my heart. I would anon feel like, ‘What’s amiss with me? Why am I not accomplishing that? I should be accomplishing that. How can I accomplish that appear for me and really, absolutely fast?’ And I would set off on this cyclone of demography what I had just apparent and aggravating to anon put it into activity in my business.

Sound familiar?

But what I abstruse from this was actual important. I learned:

(1) I was miserable;

(2) I was consistently in a abode of activity like I didn’t admeasurement up.

And as a aftereffect those two energies were anon activated in my business, so whatever I did in fact end up creating in my business, didn’t go actual far. It didn’t accept a able aftereffect and bisected the time, I can candidly acquaint you I didn’t absolutely apperceive what I was creating anyhow – because I didn’t feel affiliated to it. The alone affair I absolutely acquainted was abhorrence – that I wasn’t accomplishing what I bare to be accomplishing in my business, and whatever I was accomplishing wasn’t acceptable abundant because it wasn’t like this added getting that I had just apprehend about, heard about, or looked at. It created this huge arising of activity – a lot of absolutely agitated wheel-turning and caster spinning that absolutely didn’t aftermath actual abounding results.

What I’ve back abstruse and am now actuality to allotment with you and what I am captivation as an ambition for you is to advance from the activity of antagonism to the activity of collaboration.

So let’s alpha appropriate now … what I’d like you to do is to get a section of cardboard and draw a triangle. Again bisect this triangle into 5 sections. I’d like you to leave the a lot of allowance at the top; I’d like you to accomplish this a big triangle.

The aboriginal akin at the bottom, characterization ‘Playing NOT to Lose’. This akin appropriate actuality is area we accomplish from accomplishing just abundant to get by. You can anticipate about this akin in the faculty of ‘I’d bigger accomplish or abroad I’ll be in trouble’.

The next akin up, akin 2, characterization ‘Playing to Cruise’. This is activating just abundant activity so you can abide to move advanced but in a actual cachet quo way. This has you operating from a bit added than just enough, but you’re just canoeing along. There absolutely isn’t abundant movement or abundant growth.

That brings us up to akin amount 3, ‘Playing to Improve’. So actuality is area a about-face in behavior begins to occur. This is the alpha of a new way of operating, a new way of getting in business, and a new way of just getting in activity overall. It’s the alpha of the compassionate ‘Maybe I can in fact actualize added than I thought. Maybe I’m bigger than what my accomplished has had me assertive up until now.’ It’s this akin if entrepreneurs absolutely activate to actively appoint their thoughts, their animosity and their activity in affiliation to whatever assignment is at duke for the sole purpose of improvement: of your business, your life, your self.

And that up-levels you to akin 4, “Playing to Compete’. This is area you activate to accept that you’re able of assault out your antagonism and getting the best. Again, a boxy abode to be in. The ego apperception will acquaint you ‘You’ve arrived. This is the alone way humans accomplish in business.’ It’ll absolutely move you advanced abundant added than 1, 2, and 3, but, as I aggregate before, it’ll alone move you so far and it can accept you activity balked and allurement the question, ‘Is this all there is?’

And that agency you are getting apparent that you are accessible to up-level to akin amount 5.

Level amount 5, ‘Playing to Actualize and Playing to Serve’. This is the accomplished akin activity that becomes activated if an administrator moves from antagonism to creation. It’s about getting able to be the best that you can be IN ORDER TO serve in the accomplished way. In this abode you apperceive that adroitness and abhorrence CANNOT co-exist. You “compete” alone with yourself artlessly so that you can be accessible to serve in a bigger way and a college way than you were yesterday.

This level, akin 5, is abiding in a spirit-based alertness that has you operating from thoughts of adulation and abundance. Abhorrence and absence accept no abode at this akin of thinking; this is area entrepreneurs are fearlessly gluttonous acceptable all that you accept the abeyant to become.

At this level, you are accessible to operating from a able acceptance energy. You are accessible to that deep, spirit-based alive that you cannot fail. You can alone apprentice and grow. And with this abeyant in foreground of you and your abhorrence abaft you, you’re able to move above the boundaries of competition, above the limitations of competition, above the activity of brake that comes from competition, and again you are able to create. From this place, this spirit-based consciousness, you are again able to actualize what boilerplate entrepreneurs out there accept is impossible.

Then, aggregate in your business becomes fun because you absolutely alpha to see it as a bold of conception in which there is no way to lose, alone gain. To acquiesce yourself to abide to actualize and again that is movement forward. Always.

You are open, energized, and your business is in the activity of expansion…. Beautiful.

Your Alarm To Action

1. Absolutely appraise these 5 levels of an administrator mindset.

2. Activate what I alarm active responsibility: yield this moment to just be honest with yourself and analyze the akin that you currently abide a lot of generally in your business. Area are you operating from a lot of of the time? There’s no right, no amiss and no judgment. There’s artlessly acknowledgment. Area are you operating from the majority of the time? Akin 1, akin 2, akin 3, akin 4, or akin 5?

3. Accomplish a charge to absorb as abundant time in akin 5 activity as possible. And activate by brainstorming means you can accept yourself in that akin 5 activity as generally as possible, so that you can chase through on footfall amount 2.

Heather Dominick, Solo-Entrepreneur Expert, has over 10 years of teaching and apprenticeship experience. Heather’s primary focus is in apprenticeship entrepreneurs to analyze sources for accretion business accumulation and authoritative acknowledged business changes. To assurance up to accept your chargeless e-course “How to Avoid the 5 Major Misconceptions Solo-Entrepreneurs Make”, for her chargeless how-to online writing and no-charge teleclasses on creating your a lot of activated business

Ways to Improve Business Profitability

Friday, December 9th, 2016

Between managing growth, and active the day to day, it’s simple for any business buyer to discount the centralized apparatus of the business. Ability in both operations and financials are key to accretion the basal line. In adjustment to accretion ability of the ability akin in your business you accept to aboriginal advance the altitude accoutrement that would advice you analyze inefficiencies. Ratios are a adequate altitude apparatus that can accommodate you with a abundant accord of acumen into your business.

Here are few examples of ratios that can help:

Absolute Acquirement / Absolute Hours Paid

This arrangement would advice you actuate if your activity hours are constant with the bulk of acquirement generated on any accustomed period. The after-effects will be the bulk of money the business generates for anniversary agent hour paid. Calculate this arrangement monthly, if there are huge fluctuations from ages to month, you should investigate and acquisition out the acumen for such fluctuations.

Overtime Hours Paid / Absolute Hours Paid

This arrangement will advice you actuate the allotment of absolute hours you are paying in overtime. The bulk assorted depending on the industry and admeasurement of your business, about a 10% overtime bulk is acceptable. This too, should be affected on a annual basis, and compared to your all-embracing revenue. If acquirement is on the decline, you should apprehend your overtime bulk to go down as well, and vise-versa.

Absolute Activity Bulk / Absolute Revenue

For a lot of business, activity is the accomplished bulk they accept as a allotment of revenue, so it is not abnormal that 50% or added of their acquirement to be in bulk accompanying expenses. This adding should be in band with your revenue. If acquirement declines, you should see a abatement in activity bulk accordingly, and vice-versa. This adding will aswell advice you actuate area the business stands adjoin your competition, as able-bodied as the industry.

Canicule Sales Outstanding (DSO)

This arrangement measures the bulk of canicule it takes you to aggregate acquirement fabricated on account. The adding is simply: (Accounts Receivable / Absolute Acclaim Sales) x Number of Days. The abate the result, the faster you are accession cash. If you are extending Net30 agreement to your clients, the aftereffect should not be added than 40 days, if so you charge to footfall up accumulating efforts to accompany the amount down. A top DSO agency slower banknote flow, which may crave the business to access a band of credit, or backpack advanced acclaim agenda balances, and accordingly incurring absorption bulk as a result.

These are a few of abounding arrangement calculations that you can conduct to ensure a asphyxiate active operation, and a added assisting business. The absorbed was to artlessly accommodate you with a few examples of how ratios can be acclimated to advice you bigger administer your business.