With changing times, it is important for businesses to make changes with the way they function. Most Start-ups and small businesses struggle with overheads. Operating costs are an unavoidable step– in the end one needs to spend money to make money. A lean business model is a strategy used by firms to try to reduce waste in processes and production while parallelly ensuring that the customer is completely satisfied. The business will be able to accomplish numerous things such as an increase in sales and a terrific brand name.
A lean business model has several aspects that are meant to improve the business in numerous ways. Constant improvement, overall quality management, and just-in-time inventory systems are a few of the processes involved that help in improving the quality of the products and eliminating waste in all areas.
These are a few things that companies could do to have a lucrative lean business strategy.
- Always expect change.
The worst misstep one can do is to think that things will always remain the same. Expecting changes will make the company vigilant and proactive and responding to these changes in optimistic ways that will impact the company. Constantly improve on the business strategy. - Avoid mimicking others’ model.
If businesses want to succeed, they must be creative. If companies are not creative, it would be difficult to grow. Companies should not copy others’ business model as it is designed specifically to meet their requirements. One must come up with ways to create innovative business ideas that will push their business ahead. - Find the epicentres for the business.
Depending on the business and how one plans to run it, it is particularly important to figure out the right epicentre and start developing from there. The four epicentres one should focus on are resource-driven, offer-driven, customer-driven, and finance-driven. Companies must ensure that decisions are taken only when all these aspects are meticulously researched.
- Test the efficiency.
If the business model is perfect, companies should test it before finally rolling it out. Immediately rolling out a new and untested business model can be extremely dangerous as it can backfire and lead to a loss. Testing will also help companies get feedback and they will know how to proceed from there. - Involve the customer.
It is important to involve the customers’ feedback as the opinion of the customer is crucial. Conducting research involving the customers and understanding their feedback will be vital in implementing the concerned strategy. - Play towards emotions.
People buy with emotions and businesses should keep this in mind. Design a business model with a product or service that will address the distress points of the customers. Going after what they need will be the key to success. - Draft the strategy with two methods in mind – flexibility & lean start-up.
The transition between the business model and product development should be close to each other. Once that is done, testing the designed model with the customers should come after, changing the product or service to what the market demands should be done following that.
So many people fail at entrepreneurship because they have so much belief in their ideas that they do not take time to try it out. The best way is to start small, use an approach that has been tested and proven, then design a business model after that. This also involves maintaining the overheads of the business.
Overheads can include expenses like utilities, rent, office supplies, and advertising. And while all these expenses seem typical, it does not imply that they are needed.
If a company is serious about reducing costs without cutting corners, the following ideas may help lessen overheads.
- Go Digital
Going paperless is a terrific way for a business to reduce both clutter and expenses. One can store important documents in the cloud or on disks, sign all contracts electronically, and help save the environment. The company will not have to pay for paper or ink cartridges if all the paper files are backed up digitally; they might be able to downgrade to a smaller and cheaper office area, saving more money every month. - Splurge on an Accountant
It may seem counterintuitive to whip out a large amount for an accountant or tax service professional to do the accounting. On top of everything, tax and accounting experts will be more likely to find tax deduction that might have been overlooked. It is a big investment, especially for a small company. But it is an investment worth getting. - Evaluate the Requirements
Take a look at the office and evaluate whether all the utilities are used on a regular basis. A business should not be paying for anything they do not need, whether it is office equipment, supplies, or space. If there are unnecessary expenses, try cutting down on them.
- Find the Ideal Space
Is the office currently in a location that makes good financial sense? A company must evaluate whether they need to maintain a downtown storefront or smaller office. Sometimes companies may not even need an office/studio space. Companies that do not have many face-to-face meetings may not even require a designated space. - Ditch the Phone
There is no reason to pay through the nose for phone service. The way of doing business has evolved enough for companies to ditch phone. Again, how much one can cut back depends on the size of their company, how many employees they have, and what industry they are in. Between Skype, Zoom and Google Meet, paying for phone calls and voicemail is a thing of the past. These services also have mobile apps, meaning one can stay connected on the go. And if a company needs a “traditional” land line, consider Voice Over Internet Protocol (VOIP) over the standard offerings from phone companies in the area. - Clever Hiring Decisions
If a company must hire a new employee, they should hire someone who has multiple strengths. They do not need to have a degree in Computer Science, but if the new employee also knows how to check the IP settings, that is a huge bonus. Investing in professional development for the personnel is another way to keep them happy and encourage long-term growth and victory for the company. - Build Brand Ambassadors
Advertising is expensive and cannot guarantee consistent or impressive results. A business might pay a decent amount to run a TV, radio, or print ad in an area, only to find that they drum up little business. A smarter idea would be to get the clients to become brand ambassadors. Offer the current clients and customers incentives for talking the company up, and for referring new business. Word-of-mouth is still a persuasive tool in the digital age, and one that people tend to take for granted. Get satisfied customers to tweet about the company for discounted services or offer current customers free services for every new client they refer to the company.
And lastly, it is practically impossible to run a business without a little overhead. But these operating costs can be reduced or removed in many instances, leaving more profits in the company’s pockets. A business with streamlined operating expenses and a lean business model will have the best possible chance for success, to make sure the company is a well-oiled engine.
Remember to constantly be aware and making changes around the way the company works. As Peter Drucker said, “What gets measured, gets improved.”