How to Improve Your Business
by Horace Gomez, MSM
The purpose of a business is to generate profits for owners and shareholders. This genuine and valuable reason that motivates the entrepreneurial spirit of individuals, acts as the motor that develops the economy of communities, towns, cities, countries, and the world.
There are different business categories based on their size. There are small office/home office businesses (SOHO); small and medium size businesses (SMBs); big businesses, and enterprises. All of them share the same goal: to make profits.
Small and medium-sized businesses are in constant need for growth. Some of them are fortunate to experience sudden growth, but all of them must keep their costs to a minimum in order to stay competitive.
Reality shows that fixed and variable costs increase, making these companies lose their competitive advantage over time.
The problem is that organization and dynamics in SMBs are very different than those in big companies and enterprises. Therefore, when big companies’ practices are applied to SMBs, the “copy and paste” methodology can drive them to failure.
The question is: How can I improve my business using the experience and best practices of others?
The Profit and Loss Statement shows exactly what should be done: costs must be reduced for improvement of annual turnover to enhance the profit margin. What it does not tell you is how to do it.
The importance of optimizing processes
You must use the expertise and business practices of big companies and adapt them to the reality of your SMBs’ environment and dynamics.
The key is to focus on business processes. All organizations, as small as they can be, are set with interrelated processes.
If your business is experiencing any of these problems:
there could be hidden costs in the interfaces of your company’s processes and within the processes themselves.
To reduce the business costs and solve these problems, you must scan these processes and their interfaces to find inefficiencies, and improve them.
You must be very cautious in this difficult task. The tools and methodologies to improve processes are known and can be found in the literature (Lean Six Sigma, Kaizen, TQM, 5S, Continuous Improvement, ISO 9001, Throughput, and TIRZ). Experts offer their take on how they successfully implemented these methodologies in big companies and offer several case studies; but none of them are related to SMBs.
Do not imitate the big company model. Focus on your own business reality. Do not continue doing business as usual.
If you need help, do not hesitate to ask. Look for a consultant with expertise in SMBs that will help you identify the critical processes and problems to start working with in order to get better results. The consultant will know systemic approaches to take and the best tools to use in your business.
You must also learn how to work with a consultant. He or she must not only suggest what to do, but also guide you in how and when to do it. The consultant must work with you and your employees in your cost reduction and business improvement efforts. In this process, they should teach you the systemic approach and tools to use.
While the consultant will provide you with advice and suggestions on what to do, how to do it, and when to do it, never let the consultant make the final decisions for you. You lead the business and these are your decisions.
We defined a simple systemic approach to reduce the bottom line (costs), and now it is time to look into the other component of the profit equation, which is the top line or annual revenues.
When you need a consultant, the same considerations mentioned above are valid with the actions to improve the top line.
Once you and the critical mass in your organization become familiar with a systemic approach to reduce costs and to increase sales, and practice it on a daily basis, you will be continuously enhancing the profits of your business and letting it grow beyond your own expectations.
Tomorrow is too late, start today!
Horace Gomez is the president of Nagutor Consulting, a firm specialized in SMBs.
To reach Horace please e-mail: email@example.com
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