June 20, 2013 – ISSN# 1545-2646
Capturing your business processes
We sometimes take it for granted that our business produces some goods or services which are delivered into the marketplace and in exchange we generate revenue. These are the basic tenants of being in business.
As part of that process there are expenses for various things such as raw materials, equipment, labor etc. The ultimate objective is to have a positive difference between what your goods and services are sold for in the marketplace and the cost to produce and deliver. This gives you profit in the very simplest of terms.
Tracking what items are sold for is pretty straight forward. Knowing what your hard dollar expenses to generate the goods and services is also fairly easy to capture. So you can work on changing your profit by improving the raw costs and increasing the price point. There is a fine line as to how far you can reduce your costs and increase your prices before you can no longer sell your goods and services and the vendors can’t supply your raw materials at any lower of a cost.
Inside this business flow is the process of converting raw materials into deliverables to your consumer. Whether you are selling things or knowledge, there are still processes which touch your business. These processes have a goldmine of value.
They are the special recipe which can differentiate you from your competition not only in what you produce but more importantly how you go about doing it. Oddly enough, many businesses have very average understanding of how their business actual converts things into end consumer value.
Typically in smaller business, the original owner during startup is not only the CEO but also the COO, CFO, CMO, etc. He or she is also the production manager and most often the person who from prior experiences and employment knows the basic steps to produce whatever the organization product they will sell. It is in their head!
They begin to grow and hire others which are taught by action and activity what should be done. The when, where and how’s of the business. Unfortunately the why tends to fall out of the discussion. The focus is on getting it done.
If your business has some of these challenges, don’t be overly disappointed – you are just typical. In these days, typical is no longer enough to generate positive cash flow and profits.
So this week look at your business. Have you taken the time to capture the business processes and procedures which generate the product your organization sells into the marketplace. If you answer yes, then when was the last time you really evaluated the why’s in the process to potentially find some hidden money stuck in processing things the way you did a few years back. If you said no then now is the time to gather your staff together and get the processes defined. As you go through this effort, gain insight from those doing the tasks and find out how they might be improved upon.
Once you have either crafted your processes or reviewed them to find possible lost value in the steps, commit to a regular review of your business process so your keep you hidden costs as lean as possible.
Need help reviewing your processes to make them lean? Give JKL Associates a call to help – (313) 527-7945
Questions or comments – email us at partners@jklassociates.com or call our Office at (313) 527-7945
Copyright – JKL Associates 2013
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