The cool thing about streamlining your business is that, well, you can make more money if you do so. You can save yourself time and labor. You can move to a more automated system that allows for growth and you can keep your customers satisfied. All in one fell swoop, as they say.
Is this some magic formula that’s been kept in a vaulted dungeon somewhere all these years? Is this some basic business principle that’s been around forever and is now just been given a fancy, new name? Is this just a way to sell you some software?
What if I said it is all of the above, except that it isn’t really magic and it hasn’t been kept in dungeon vault. Streamlining is, however, in the natural order of things. Businesses generally start with a scattered approach, hoping to do well in some niche along the way. Then, over time, the business owner finds they are pouring money into a black hole, hoping to keep everything afloat.
However, business owners tire of juggling twelve different businesses at once and get burned out. Then they hand over the reins to some unsuspecting manager and wait in the wings until their dreams collapse, like a house of cards.
Stop. Look. Listen.
Consider the case of a well-known restaurant in the city near my home. It is a wine and liquor retail store that decided to set out some tables and pour drinks for customers, while selling bottled liquor to go in another side of the store. Soon, they added snacks and it wasn’t long before they had a combination liquor store, bar, restaurant, gift shop that took in about $5 million in revenue per year.
And it was sinking faster than a stone. The business owed suppliers about $750,000 and had inventory of about $190,000. Rent was about $15,000 per month. Boy, were they in trouble.
Streamline to the rescue
In that business, only the bar and the restaurant were making a reasonable profit. The 20 or so staff members were happy with the place, because it offered some variety, but why would you hire and pay five staff members to run a gift shop that was just breaking even, but taking up valuable space in what could be an even larger, successful restaurant?
You can see where this is going, right? Cutting out the gift shop and the retail liquor store and you’ve got a smaller payroll, more room for the restaurant, and about 25 fewer suppliers who were also unhappy that the store was not moving their merchandise fast enough.
Expand the bar and you’ve got more high-profit revenue there. Expand the kitchen, so the business can cash in on what it was doing well. Streamlining in this case didn’t meant slim down the business. It meant: Go For It!
What do customers like? Businesses that are easy to understand, convenient and present themselves as experts in their field. A scattered business confuses customers. They might browse, but not buy, if the business is too spread out.
Evaluating customer satisfaction can be done many ways. Sales per visitor is one metric. The CRM evaluation process (Customer Relationship Management process) puts a different weight onto different aspects of a customer’s experience to reflect specifics of your business. That’s another option for business owners.
Sometimes streamlining just means asking yourself what is the core business that you’ve got and pouring your resources into that one successful, centered enterprise.
Did I say streamlining meant new software? Well, I did – but only because your focused business might require a more focused production model and specialized software and other equipment to go with it. This is not a sales pitch for streamlining software, but just a nudge telling you might have a chance to consider that as your focus improves.
Streamlining can help you stay ahead of the competition, because a business that keeps a sharp eye on one specialty is going to be more on top of things within that specialty.
Streamlining is often about making common sense decisions that can be difficult to make for a number of reasons. First, the business owner might have his or her heart (and money) in one aspect of the business and not recognize the point that it is putting a drag on the rest of the enterprise.
My recommendation is to think like a shark – exactly like one of those sharks who buy businesses on the reality TV show. They think in very simple terms: Valuation, profit, orders, expansion. What’s the value of the company? What’s the profit margin on sales? How many future orders can be confirmed? Does the business have the potential to go regional or national?
Those sharks are just as human as you are, but they make decisions based on numbers, not whims or emotions.