The Benefits of Lean Operating Principles for Small Businesses (And How to Realize Them)

If you are a small business owner or entrepreneur that has been around for a while, chances are you have heard about the concept of lean business operations. It’s an idea that’s been popular in the manufacturing sector for many years. In fact, global auto manufacturing giant Toyota invented the idea — and it turned them into one of the most successful companies in the world.

But most business owners think that lean operating principles only apply to big companies, and that could not be further from the truth. Lean operating principles are broadly applicable and can help businesses of all sizes to increase efficiency and boost their bottom line. But to apply them, you have to understand them first. To help, here’s an explanation of lean operating principles and some tips on applying them to your business.

What are Lean Operating Principles?

Put simply, lean operating principles call for identifying all the elements that do not add value to your operations and getting rid of them. In other words, it’s a pathway to analyzing your operations and paring them back to the bottom-line essentials. A lean operation aims to spend money on what works, perfect its processes, and eliminate waste.

Lean Works for Any Business

One of the primary reasons most small business owners think that lean principles are only viable for large corporations is that they believe they only create results at scale. However, regardless of the size of your business, getting rid of waste is always imperative. Doing so not only allows you to reduce your expenses but also boosts productivity.

Tips to Implement a Lean Business Program

If you have been considering implementing a lean program in your business, the following tips should help you get started.

1. Identify & Handle Waste

One of the primary goals of lean programs is to get rid of waste. The challenging part is identifying it.

This is because waste in business operations can take many forms. For small businesses, these can include overproduction, unnecessary transportation of materials or goods, and even the under-allocation of human resources.

In short, every time the business spends money that doesn’t contribute to a sale, it’s a waste. Every dollar spent on warehousing overstocked items is a waste. And every man-hour paid for that isn’t spent doing work is a waste. But finding waste means gaining a complete understanding of how your small business operates, from top to bottom.

A great way to identify and handle waste in your business operations is to talk with those responsible for each specific process. More often than not, they will have a better understanding of what’s happening, what could use optimization as well as the steps required to make changes for the better. Your employees are an invaluable resource — and you should listen to what they have to say.

2. Go Smart

Using technology to make your business leaner is a pivotal way to get a business advantage. This may require investment, however, with a little savvy these investments can pay you back dividends in no time. Smart buildings can be one such way to do so – saving energy, time, and effort and in turn, benefiting business handsomely.

Automation technology offers small businesses another technological option to embrace lean operations. Today, countless routine small business tasks can be automated. And each one can have a ripple effect that makes the whole business more efficient. In a way, automation is the ultimate expression of lean principles. It lowers costs, reduces the workload for employees, and decreases the time-to-completion of a variety of tasks.

3. Outsource Where Applicable

Most small businesses do not like to outsource as they deem it as a waste of money and resources, especially when they have in-house departments or team members already doing the work. But that doesn’t mean those employees are being put to the best possible use. They may have skills that the business could put to better use elsewhere — or they could be spending too much of their time on work they lack the proper skills to handle.

Although outsourcing isn’t a solution for every small business, it’s more accessible and useful than you may think. And small businesses are beginning to recognize that. According to a recent survey, 8 in 10 small businesses had plans to outsource certain processes in 2021. And there’s a good chance a great many more will do so this year. When done right, outsourcing is an excellent tool for implementing lean principles in a small business.

4. Gather Data and Utilize It

Another great way to begin implementing a lean program in your small business is using data. But what data you might ask? The answer is all that you can gather. With data related to each of the processes in your business, you will be able to tell more easily what can be improved.

Data collection and analysis are the keys to gaining process visibility and making informed changes to the way your small business operates. All you need to do is make the right data collection plan and identify a specific operational goal you’d like to achieve. Then, use the data to point you toward inefficiencies in your processes, and fix them.

5. Document all Your Processes

Most small business owners tend to rely on certain staff members who know how everything works inside the company. But what happens when they need a day off or fall sick? Most of the time, business processes grind to a halt.

Any business looking to adopt lean operating principles must make an effort to document all of its processes. There should always be more than one employee well-versed in each facet of operations. And, the documentation should be clear enough that another employee can step in and help when needed. That helps to guarantee continuity — and therefore efficiency.

The Bottom Line

At the end of the day, lean business principles are all about doing more with less, and fine-tuning operations to be as efficient as possible. That’s why they work well for businesses of all types and sizes. And small businesses can benefit from them just as much as larger ones. And although the changes small businesses might make in pursuit of lean operations may seem insignificant — they add up in a hurry. So if you’re thinking about ways to make your small business more efficient they’re an excellent option that you should take advantage of right away.