Sometimes we need to go on a diet when we have been overeating. The length and type of diet depends on how much extra weight we have put on.
The same goes for your business. In this analogy, calories represent the amount of money leaving the business. High outgoings (high calorie intake) over a long period of time means your business (you) may be struggling financially (overweight, bloated, sluggish).
Keeping your operational expenses under control, while also remaining efficient and meeting customer demand can be a challenge – one that can catch out many business owners.
This is why running your enterprise using a lean business model is such a good idea. By keeping operations, stock and processes to a minimum, you reduce your outgoings, speed up efficiency and improve your cash position.
How long you need to run the lean business model depends on how much your business is struggling. You may choose to do it until you reach a particular goal (like reaching a particular weight). Or you may decide to take it on for good (like continuing a lean lifestyle). But how does the lean model work?
5 core elements of a lean business model
In essence, a lean business model aims to eliminate waste in your operational and product manufacturing processes, while still allowing you to meet your customers’ needs.
Originally a methodology that came from the Toyota Motor Company in the 20th century, the aim of lean manufacturing is to cut back the processes to the bare minimum. This helps you streamline the production of goods, cut your operational expenses and still meet the demands of your customers – running the whole organisation in a lean, efficient and profitable manner.
Some core element of a lean model include:
- Cost efficiency – cutting waste is central to the lean methodology. Applying lean allows you to reduce waste in the manufacturing process and minimise any unnecessary spending. This allows you to optimise your resources and allocate funds strategically.
- Decreased owner drawings – just like looking at what you are eating that has made you chubby, owners need to have a good look at how much money they are taking from the company as drawings or wages. Minimising withdrawals for a period of time can lead to a better functioning business, which is easier to maintain (just like reducing your calories when you are on a diet). Don’t starve yourself. Just don’t over indulge.
- Enhanced customer focus – promoting value is another core element of lean. By eliminating non-value-added activities, you can prioritise customer satisfaction and deliver tailored products or services that meet your customers’ exact needs.
- Streamlined processes – lean methodologies streamline your workflows, reduce bottlenecks and enhance your overall operational efficiency. This all leads to improved productivity and shorter lead times, helping you quickly deliver your product to market.
- Sustainable growth – running a lean business model promotes long-term sustainability. There’s a continuous focus on improvement, adaptability and financial stability, all of which helps to make you exceptionally competitive and ready to grow at pace.
Talk to us about implementing a lean strategy
Tell us about your current production and operational strategies. Let’s see how switching to a lean methodology will set you on the path to a more efficient and profitable future.
Get in touch to talk about lean strategies.
This post was originally written by BOMA and has been updated to make it more personal.
