Change the way you look at things and the things you look at change!
Often business strategy sessions are focused on doing more with more – more people, more customers, more products, more systems, more equipment… and it goes on.
We challenge our clients to think, firstly, about how they might do more with less – less people (hours), less customers, less products, less systems, less equipment.
So let’s think about this…
1. Less People
Our challenge is to identify one full time equivalent (FTE) person(s) who you could do without, and do so in a way that 100% of their salary and on-costs will fall directly to the bottom line.
If you have less than 5 in your team – your challenge will be to reduce the hours overall by 5 hours per week per person.
We know that this may not seem possible, but if it was possible how would it look? Who could you let go or whose hours could be reduced? Let’s just go with this… it may not be one person, it might be a combination of “parts” of people. You might have a number of people going from full-time to part-time for example. Who has the capacity to take over those activities that this FTE person did, are these activities still necessary, can these activities be done more effectively so that they take less time? Keep innovating until you have identified one FTE person worth of time and money. You are not compromising service and value.
So now, you have an excess of one FTE person – you can choose to:
- reduce hours or people… OR
- do even more, now that you have created capacity in your team.
2. Less Customers
More often than not there is a focus on attracting more customers and that may be valid. Again, our challenge is to identify customers who are not profitable – in whom you are investing more than your return. Remember to take into account life time value. It may be a customer(s) who is using a product that is no longer your core range, or is out dated. It is likely that this customer does not meet your ideal customer criteria!
Again, you have identified customers who you could let go and as a consequence see an increase in profitability.
Now you have a choice:
- to let them go and replace them with more profitable customers… OR
- to change the way you do business with them so that the relationship generates a positive return. You may change what you sell to them, how you sell to them or a price adjustment may be in order.
3. Less Products
The challenge is to identify those products or services that are no longer profitable at the current price point and with the current sales process in place. Sometimes this is a historic development – something that has flown under the radar while the focus has been on introducing new products and services.
Again you have a choice:
- to drop the product or service from your offering… OR
- change the price point, the “seniority” of the person involved in the sale, and/or the sale process for example.
Go through the same process with systems and equipment.
Your challenge is to identify those people or hours, products, customers, systems and equipment which are not, when taken in isolation, generating a positive return. In fact, when taken out of the business, net profit actually increases.
Then you have a choice – you can choose to:
- let “it” go and direct your focus towards more profitable pursuits… OR
- make innovative changes which will return “it” to profitability.
Take up the challenge to change the way you look at your business. Look for opportunities to do more with less and then you will find you have more options… It is a different focus and a very effective strategy!
At Opening Gates we see INNOVATION as one of the critical business foundations – and this process is one way of encouraging the innovative process. Innovation is just one of the concepts we cover in our BUSINESS by DESIGN workshops.
We know that when you change the way you look at things, the things you look at change!