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How to Run a Lean Business

How to Run a Lean Business

Entrepreneurship

GlobalLinker Staff

GlobalLinker Staff

6 Oct 2014, 11:17 — 4 min read

“Lean” is the most effective (also most cost-effective) way of running a business. It is the constant process of eliminating wastage, finding every activity that does not create value and doing away with it. 

 

One of the biggest challenges that entrepreneurs face is keeping costs down. So what are some of the ways that one can make one’s business lean and capital efficient? Here are some pointers:

"Lean" means creating maximum value for customers with limited resources. Here are few ways by which entrepreneurs can make their business lean and capital effective. 



  1. Be ruthless
    Analyse every process and review if its running efficiently. Processes that are not performing up to par must be eliminated or replaced. Every activity that does not add value to the company must be removed. For instance, travel expenses can be optimised if well prepared for and with a clear agenda. Advance preparations via audio conferences and  via skype or video conferencing can ensure productive session with best output.



  2. Believe in your employees
    Empower employees to suggest changes to processes that are not efficient. Employees can come up with innovative solutions to run a cost-effective business. Employees may suggest to follow the Bring Your Own Device (BYOD) policy at work. This could save considerable investment in machines for the company, though it is advisable to have some ground rules and agreement in place around confidential data.



  3. Repurpose
    Re-use and recycle as much as you can. Paper and envelopes must be reused. Even furniture can be refurbished and reused. For example you can do up an office creatively keeping costs under control, yet creating a high-energy environment.



  4. Dignity of labour
    As a team leader, one can establish the tradition of no work being too small or unimportant. This respect for the smallest job means that a CEO will be just as likely to make coffee without necessarily waiting on protocol. Every person’s willingness to do any task will set a great example and will make for a lean and agile business.



  5. Budget & well-defined process
    Define the company’s main expense components and monitor them. Avoid slowing cash flow by purchasing inventory that is not required. Having a well-defined process for each task means that you will be able to easily identify and tackle bottle-necks, respond to crisis and streamline the work.



  6. Be creative with cost cutting
    Think of innovative ways to cut costs without compromising on the quality of the final service or product. One way of balancing human resource cost is by ensuring a good mix of experienced and lesser experienced people. Scout for fresh talent and have your experienced staff train and groom them to be the perfect fit for your business. This cycle can keep repeating itself as you grow and need more people.



  7. Make a cultural change
    Ultimately, to make a business lean, one has to adopt a shift in attitude and mind-set. Waste-cutting techniques must become an ingrained way of life for all employees. 

 

A lean company is about ‘right-sizing’ an organisation and about managing expenses smartly – doing more with less. It is often misunderstood as pure ‘cost-cutting’, which it is not. Businesses are built for the long term and truly lean organizations win in the long term.

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GlobalLinker Staff

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