How to build a lean, mean profit machine

by Steve Parks

STEVE PARKS is an audio publishing entrepreneur and the author of several books on entrepreneurship. He’s found that one of the best ways to steer your business towards greater efficiency is to borrow from the big guys – in particular, the famous ‘Lean’ model developed at Toyota.

Take just one process in your business:

What happens between making the sale and getting paid. The idea of ‘Lean’ is to shorten the line between those two points, with the fewest steps, the minimum cost and the smallest complexity.

So, at the start, you might task someone to simplify your sales team’s order form. Or you might implement an online ordering system, so new orders flow straight through to the next stage of your IT system. You might review your pricing, or tighten your sales conditions to give you more leverage in improving payment.
And you might consider how your business funds each stage, and how to reduce costs or improve cash flow. You might sell and lease back some equipment; outsource the management of your vehicle; improve the efficiency of pulling stock from suppliers; pay suppliers electronically to reduce transaction charges.

Encourage early payment

At the end of the line it’s worth pressing your customers to pay you electronically, perhaps even online. It may be worth offering incentives for early settlement, and enforcing penalties for late settlement. Could you ask for an element of payment with order to bring some of the income to the start of the line? Is it worth using invoice finance?

And, you’d be amazed how much your Relationship Manager can help to make your processes leaner and get your business to work harder for you. They have a lot of experience – so just ask what they can do for you!