With the apparent struggles in today’s economy, panic has begun to set in with business owners and decision makers everywhere. What are the results? Companies have realized that to survive they have to find ways to eliminate waste. This can be accomplished by implementing the Lean Management concept. In short, Lean Management means more production with fewer resources. From a vendor perspective, sellers of supplies and services have had to restructure their sales approach and profit margins based on client’s fears, economic hardships, and general awareness of softening market demand. Conversely, customers have begun demanding more and more value/service for their dollar.
A large portion of customer awareness comes from the evolution of procurement departments inside corporations. These procurement specialists excel in negotiations and cost cutting measures and have begun to hold vendors accountable for maintaining a competitive market value for the supplies or service they provide. This has opened new opportunities for companies to use leverage for better contracts, price guarantees, volume discounts, rebates, and improved service levels. Additionally, “internet” shopping has become the kryptonite for vendors margins. In the click of a mouse, businesses can check to see if they are getting fair market pricing and often switch vendors constantly.
The efficiency a company can pursue comes from the act of optimizing flow throughout the process of the product or service. To start, a company should implement managers meetings to discuss, analyze, and identify the specific areas of waste. Some key areas of waste found within most companies include the following:
-Waste One: Unnecessary Transportation
This is important because goods have a tendency to get damaged or lost when they are in transit. Valuable time and money resources are spent in this process, whether it is human energy or fuel from a fork lift. Un-needed transportation costs that can be included for free if requested in delivery contracts, severely impact company’s cash-flows. Back-hauling, GPS routing/delivery software, and transportation co-opping have been used effectively to reduce transportation waste.The ability to minimize transportation costs will increase company efficiency and always add to the bottom line.
-Waste Two: Over Processing
In this case, over processing occurs when too much time, money, or effort goes into producing a product than what is actually needed. Simplifying SOP’s and streamlining processing protocols have tremendous value for all companies. Transferring manual tasks to automated, or even virtual systems, can restructure human capital towards more revenue generating activities while improving time and costs of production simultaneously.
-Waste Three: Motion
This relates to the placement of machinery with an interest in keeping workers from walking 50 yards and picking up spare parts every hour, thus becoming wasted motion. Additionally, administrative motion waste can be reduced by very simple solutions like moving copier/fax machines, adding machines, or yet again…implementing wireless or virtual technology to maximize efficiencies.
-Waste Four: Inventory
Inventory is a necessity for most companies. However, too many raw materials, finished products, or administrative supplies being held will create problems in cash flow. Constant analysis of a company’s turns ratio of goods is an absolute must. The less time it stays on the shelf while your money is tied up and being charged interest through your LOC, the more profit your company will make. This waste category is the most common issue found within ALL businesses and one of the easiest to address.
-Waste Five: Defects
Defects in product, back-ordering, failed services, etc., are a HUGE drain on profitability. The redundant time and effort of “fixing” the problems on orders that have already been invoiced can be a department unto itself within some companies! Knowing exactly where your business’ flaws are and constantly having data to see where they begin and end are an essential aspect of any business.
-Waste Six: Waiting
The time that companies will waste while they wait for resources to be put into use is very annoying and inefficient. It will affect the flow of productivity and outflow of product. Develop SOP’s not only within your business, but outside as well with your vendors. Create clear guidelines on terms of both service AND time requirements associated with these services. For instance, only allow vendors to deliver products and services between 2pm and 5pm. This reduces interrupted workflow, coordinates the entire office, and will make EVERY company more efficient and profitable.
Clearly there are multiple other areas of waste and tips toward eliminating them in a business. But for the purpose of this blog, understanding what “Lean Management” is, identifying some common areas of waste, and how to eliminate that waste from your business, we hope it helps…
Casey Price –Business Development Executive
If you are a small business owner in today’s economy, you may be wondering where you can find capital to help support the growth of your business or to source or manage working capital. Today’s blog provides an outline of sources of capital available to many small businesses, with more detail to follow in subsequent posts…
The SBA does not make direct loans to small businesses but rather sets the guidelines for such loans, which are then funded by its partners (lenders, community development organizations, and micro-lending institutions). The SBA guarantees these lending sources that a large percentage will be repaid (guaranteed by the govt.), thus eliminating some of the risk to the lending partners. SBA loans carry many pros and cons which will be covered in another blog.
Lines of Credit
A line of credit is essentially a credit account that can be readily accessible at the borrower’s discretion. Interest is paid only on money actually drawn down, although in some cases the borrower may be required to pay an unused line fee, often a percentage fee on money not drawn down. Lines of credit may be secured by several classes of assets including equity portfolios such as real estate, accounts receivable, or inventory. Controlling ownership in equity or stocks in the company is shielded but loan covenants can be onerous.
Cash Flow Lending
Cash flow lending is debt financing where a company’s expected cash flows act as collateral for the loan and primarily consists of senior term debt and subordinated debt. Lenders will consider a company’s historical cash flow characteristics, including the amount and stability of cash flows, as well as risks to future cash flows, in determining whether to lend and how much. This can be a very appealing source of capital for well established or larger companies.
Venture Capital / Private Equity
Venture capital and private equity capital may be available for the small business owner who anticipates significant growth and can clearly demonstrate a path to achieve it. Generally, the riskier and earlier-stage the company is, the more expensive the equity capital will be. With this source, there is no scheduled guarantee of payments on invested capital, thus allowing this lending source to require large (often times controlling) equity stakes and/or multiples of gross profit dividends before the “owner” sees any return. Venture Capital/Private Equity customarily deals with several millions of $$ and is not applicable to a “mom-and-pop” business model with slow to steady growth models.
Angel investors are typically high net worth individuals, or consortiums of high net worth individuals, with an interest in investing in early-stage companies and startups. These individuals can often be located through networking and local and regional entrepreneurship organizations and are normally structured via equity stakes or preferred dividends on profits. Angels have the ability to demand equity or profit concessions along the same lines as the Venture Capital / Equity groups but typically act as silent partners and not acting management.
I will go into much further detail in blogs to come with each source but wanted to make our readers aware of the many options of funding that are available and at what costs from a 30,000 foot viewpoint. Depending on your business, any one of these sources of capital could help take your business to the next level.
What is networking?
Why should I do it?
How much time does it take?
Which group(s) should I join?
I’m not in sales, how will this benefit me or my company??
These are all very common concerns when contemplating and/or deciding to begin networking and the pros and cons associated with it. Without answering all of these questions specifically, I feel that the most important aspect with networking is to be involved in a variety of networking groups because it does not limit you to one business vertical or geographical area while simultaneously reaching a much broader audience by virtue of diversification. And networking by definition is:
the exchange of information or services among individuals, groups, or institutions; specifically : the cultivation of productive relationships for employment or business.
Therefore, the more you are out there promoting yourself or your company and cultivating relationships with different networks, the better the odds are of you landing that new client. Because as we all know: people do business with people they know. Period.
Adding to this theme, every networking group will have a specialty or focus that could benefit you or your firm. But clearly, successful networking involves not only gaining referrals but giving referrals. And the old adage that ‘giving to receive’ couldn’t be more apt than with networking. You will be shocked at how many business opportunities you receive by completely focusing on setting up your networking colleagues with potential clients for their benefit…regardless of their closing success.
One of the most uncomfortable hurdles in networking is the act of actually introducing yourself to new people. No matter how fearless you might be, it is awkward and somewhat stressful. The best way to meet someone at a networking event is to offer them a firm handshake with a non-assuming smile, and nothing more. Once engaged, try to discuss something positive about the event, or a recent introduction, so the individual or group you are speaking with can find a common talking point. This will make them feel more comfortable and you as well. Don’t speak about your company or yourself until asked, and even then be somewhat mysterious about what you do to subliminally encourage follow-up questions where you can be more specific while gauging their true interest in hearing more about you and your company. However, don’t forget that qualifying them as a potential client or referral resource during your talk should always be on the forefront of your conversation.
Following-up could compete directly with diversifying your networking events in the importance hierarchy of networking. Without prompt, courteous, succinct follow-up, spending time at networking events is absolutely a waste of your time. Make sure to write an email or txt (never phone them…too pushy and too personal) within 24-48 hours after meeting them and suggest a meeting at another time and venue where the two of you can really get down to business.
At the end of the day, it is essential to do your due diligence in order to capitalize from your introductions and these tips will help you be better at networking with new people. But remember to be yourself. No one wants one person one day and another person the next.
Networking is designed for introductions and new business relationships that result in new revenue. Don’t be that person that misses out on a huge potential payday because you are too scared, skeptical, or uninformed to try it…
Troy Bielicki -Director of Sales Development
Cloud computing gives small businesses the freedom of not having to have physical infrastructure such as file and email servers as all of these current requirements can be moved to the internet and be accessed via an internet browser. It is the technology of the future, for better or for worse, so I have included some of the benefits and concerns that will affect small businesses.
As more and more small businesses are sending their employees to their clients, the ability to easily access information from the company’s “cloud” server can be hugely efficient and cost effective for the employee as well as the company. With this new technology, employees will have complete access to computer files no matter where they are in the world and those benefits are self explanatory!
Not only is the accessibility to shared company documents, proposals, etc. a benefit, the cost of this service is dramatically cheaper. Currently, companies must pay licensing fees, maintenance fees, storage fees, among other costs to have a server on site, or offsite. Additionally, not having to have a full time server expert on site to manage the server is a bottom line saver for any small business.
Currently, small businesses have to spend money getting new employees up and going with the purchase of the license for the programs the company uses, the installation charge, and time and the downtime for a new employee to have all these things occur. With the “cloud”, a new employee will be able to easily log onto the “cloud” and have immediate access to all the company’s programs, documents, power-points, and software (example Outlook). Each new employee will be able to immediately begin the job they were hired to do translating to increased productivity and consistency of procedure and protocol.
As good as the concept of the cloud is, there is one major detriment: it does not provide the same security as having a true dedicated server for a business. We have all heard of companies being hacked, and that risk still exist with the traditional server, but with a “cloud” server, that risk and potential exposure is much higher.
As any new technology comes on board, there will always be kinks. The cloud is a new concept and as it matures over the next couple of months the stability will improve offering more reliable service etc. Not to say it is not reliable but as the adage goes it is not good to buy a new first year model car as there will be kinks that need to be worked and it is no different in technology.
All in all the “cloud” technology will change the way small businesses conduct business in the future. It offers many positive solutions including remote accessibility, cost savings, and streamlining of shared information, policies, procedures, and protocols. But with any new technological business solution, there are always risks. And security is a very serious argument to stay away from the “cloud” until providers can provide a guaranteed higher level of security.