One of the fundamental Scaling Up questions relates to execution: “Are all processes running without drama and driving industry-leading profitability?” You have to have the right people in your business, and they need to be doing the right things, but in many companies the work processes consume too much time, cash, and human energy. Do your work processes support the growth of your business – or do they slow it down? Are they contributing cash for growth, or are they siphoning off the funding you need for scaling up?
In the early stages of business, sometimes process issues aren’t as noticeable. When you’re operating solo they might consume more of your time than you’d like, but your time is a soft cost, right? You don’t have to write a check when you’re the top guy or gal and you invest too much of your own time finishing a project. But as the business grows and your staff grows, too much time in a process costs hard dollars in salaries and overtime. In addition, slow processes pose a competitive risk. If your clients need your product or service fast and you can’t get it there when they need it, a competitor eats your lunch. That’s potentially the lifetime value of that customer that we’re talking about – not just this one lost sale.
Time isn’t the only source of waste – and drama – in your processes. Here are the big seven:
- Overproduction – You have finished product sitting around, consuming cash.
- Wait time – Partially finished product is sitting around, waiting for the next process step. If you do any tasks or operations in batches, you have wait time.
- Transportation – When work in process has to be moved from location to location (measured in inches, feet, yards, even miles) you incur cost and time.
- Inappropriate processing – Do you REALLY need something fancy here? Fancy almost always takes longer and costs more than simple does. Think technology when we are talking about this. Do you REALLY need a tech solution and all that goes along with that?
- Too much Inventory – Do you have piles of raw goods sitting around, or partially finished goods? Regardless of the “deal” that you received when you purchased in bulk, it’s no deal when you can’t recoup your investment for 6 months. Cash is the fuel for growth.
- Unnecessary motion – When people have to move too much to complete a process, you consume extra time, and you also can increase the likelihood of injury.
Sometimes when companies think LEAN they focus on their factory floor – on their make/production and inventory cycle. But the overall cash conversion cycle in your business (it’s the oxygen for growth, remember?) also includes your sales process, your delivery process, and your billing, payment, and collection processes. Even if your production floor is operating like clockwork, if your sales process takes too long or clients don’t pay on time, financially-based high drama can ensue.
If your processes are stress producers and not drama reducers, we can help. The Gazelles process provides the framework for you to look at your entire Cash Conversion Cycle. It enables you and your team to identify the key processes you need to streamline to grow faster, profitably, and sustainably.