“You’re a lean, mean, fighting machine!”
-Bill Murray as John Winger in Stripes
What comes to mind when I mention that your business should be running “lean?” If you are a management consultant “lean” would mean:
A generic set of management strategies used to change the culture of organizations to bring about dramatic improvements to key metrics.
*Yawn* For me, the word “lean” in a business context means:
Not spending a penny more than you have to create value for your customer.
Easy, right? Well, it is a sad fact that most businesses don’t stay focused on remaining lean. The boom days of years past saw an explosion of small businesses pop up all over the landscape. These businesses grew up in an environment where money was easy to come by and customers were abundant. There was plenty of money to go around, so overhead was taken on without a second thought.
Fast-forward to 2008, and many of these businesses found themselves in serious trouble in a hurry. Customers disappeared and small business credit became virtually extinct. The overhead costs that were easily paid before soon became crushing burdens.
Most small businesses that fail don’t go out in a blaze of glory. Instead, they simply die on the vine from a cash flow shortage. Every business runs into hard times and periods of cash flow diminution. It is the lean, focused businesses that continue to survive and even thrive in those times.
Getting Lean
Business owners should look at mid-year as an opportunity for a “tune-up.” They need to examine every area of expense, cut the fat and rein in costs that are unnecessarily high. Don’t go into your accounts with a financial sledgehammer and smash every cost. Instead, take the time to conduct a detailed analysis of the return on investment you receive for every dollar spent. Then, pick up the scalpel and do some financial surgery.
The smart companies will look at their financial records for 2010 and ask, “How can we make sure we operate in a lean and effective manner and cut costs where it makes sense to cut without impairing our competitiveness?” Those companies will finish the year lean, healthier, and competitive. The other companies, well, they won’t be around for much longer in this economic environment.
The Tip
Take a look at your financial records and closely scrutinize every recurring expense. How is each dollar of those expenses contributing to creating value for your customers? The idea is to make every element of your business the best it can be, without sacrificing effectiveness.
Take the time to do this now and soon your business will be a “lean, mean, fighting machine.”
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