Going Lean: Implementing Lean Principles in Small Business Operations
Picture this: We had a client, a local Colorado AV company, working hard and doing their best, but they were having a rough time with their Project Close to Invoice process. They were spending an average of 11 days to wrap up a project and invoice their clients. In some cases, it even took them over 30 days after the last day of an event to get the final invoice out - talk about a delay.
This wasn't just slowing things down; it was also messing with contractor payments and putting a squeeze on their cash flow. We stepped in to introduce the magic of lean principles. We managed to cut down that close to invoicing time to an average of just 6 days. The result? Lower costs, better cash flow, and a slicker, more efficient operational structure. Now that's what I call a transformation!
So, what's this Lean magic? Lean principles are like a secret weapon that have been embraced worldwide by businesses big and small, product and service-based, to kick waste to the curb, ramp up efficiency, and deliver top-notch value to customers. The heart of Lean is all about continuous improvement, putting customers first, and making processes as efficient as they can be. Lean isn't just for the big guys. In fact, Lean principles are like a superpower for us small businesses, helping us do more with less and compete with the corporate giants despite having fewer resources.
Implementing Lean Principles
Here’s the basic structure of a lean process improvement plan that you can use to guide you in implementing changes in your business:
Start With Your Voice-Of-The-Customer: The journey to becoming lean starts with understanding your voice-of-the-customer (VOC). VOC is a fancy term that simply means the needs and wants of your customers. It's about listening to your customers, understanding their expectations, and translating those into actionable insights. Think of it as getting inside your customer's head and seeing your business from their perspective. A lot of us have this down with our sales avatar and we simply need to build it out to understand not only what it takes to pitch and close our clients but also meet their expectations throughout their time with us.
Determine What Is Critical To Quality: Once you've got a handle on your VOC, it's time to determine what is Critical To Quality (CTQ). For example, for a marketing agency, CTQ items might include clear project briefs, access to brand story or existing brand elements, and timely communication. These are the things that your customers deem important for quality service.
Map Your Value Stream: Next, create a flow chart of your current process and identify where you create your CTQ items. This is known as mapping your value stream. It's about visualizing your workflow from start to finish and pinpointing where value is created.
Identify Low Value Tasks: Within your value stream, you’ll be able to pinpoint which tasks are low-value. These tasks can be deleted, automated, or revamped into high-value tasks that better align with your VOC. This step requires a critical eye and a willingness to let go of processes that aren't serving your customers or your business. Remember, Lean is all about eliminating waste and maximizing value.
Create Your Action Plan: Now we’ve got to go from theoretical to actual. This is your roadmap to becoming lean. It outlines the steps you'll take, the changes you'll make, and the metrics you'll track to measure success. And remember, Lean is a journey, not a destination. There will be challenges along the way, but with a solid plan and a commitment to continuous improvement, you can overcome them and reap the benefits of Lean.
Identifying which processes to go lean in first
Deciding where to implement Lean principles first can feel a bit like standing at a crossroads. There’s a lot of directions to choose from and, ultimately, you should start with where you’re having the most pain points. Alternatively, here are my top picks for what to tackle first:
Sales - Lean processes are all about the voice of the customer and, as mentioned in the previous section, we often already have a lot of our VOC built out in a sales avatar and our sales team is usually the most equipped to tell us what our clients are looking for. Plus, focusing on sales first has KPIs that easily tie results back to revenue. Just like building a house, starting with a solid foundation (your VOC) can set the stage for success.
Accounting - If you're not on top of your numbers, you're flying blind, my friends. Your sales process should connect seamlessly to accounting and billing, making this an obvious next step. Larger businesses might prefer to start here instead of sales. But for many small businesses, ignoring the sales process is too risky and accounting processes tend to be simple enough that they don’t need to be tackled first.
Client Experience - From onboarding to service delivery and offboarding, mapping out your client experience and getting it lean can boost client retention and cut operating costs. It's all about delivering on promises made by your sales team and making sure your clients feel valued and taken care of every step of the way.
Team Management - Don't overlook these internal processes! Things like team retention, onboarding, and other HR-related processes can significantly affect client retention, operating costs, and more. Remember, happy team = happy clients = healthy bottom line!
Improving one of these areas can lead to improvements in others. For example, streamlining your sales process can make onboarding and service delivery easier. Or making your client experience lean could improve team morale by reducing stress and confusion.
So, when you're deciding where to go Lean first, think about the bigger picture. How will improvements in one area ripple out and impact the rest of your business? And remember, Lean is all about continuous improvement. So, once you've tackled one area, don't stop there. Keep going, keep improving, and watch your business soar!
Your Next Steps
Going lean comes down to making our operations smoother, our customers happier, and our bottom line healthier (so our day-to-day lives are all a little bit easier). It's about saying goodbye to waste, inefficiency, and frustration, and saying hello to streamlined processes, satisfied customers, and increased profits. Who wouldn't want that?
If you’d like to understand more about going lean and streamlining operations, you can dive deeper into lean processes with our training guide, "Streamline Your Business". Just click here to download now.
If you’re ready to take the plunge and start implementing Lean processes in your business and don’t want to go at it alone, then book a chat here with one of our Process Improvement Champions today.
We’re wizards at helping businesses like yours go Lean.