Making Money From The Inside Out – It is a well-understood axiom of the business world that there are two ways to improve the bottom line of business. Otherwise, simple, both ways are to make money or reduce costs. Now no company can reduce costs towards profitability. But in the same way, excessive waste and internal costs for any business can consume any profit the business enjoys. Therefore, to advance in a competitive business environment, both methods must be used.
When a company looks toward cost reduction, there is a stated or unsentioned business purpose that the business owner will encounter a significant revenue hemorrhage occurring in the business-doing system. So if those systems can be improved to eliminate that waste, companies will actually make money from the inside out because business overhead will drop dramatically.
Making Money from the Inside Out of 2021
The usual progression of such cost-saving campaigns by companies is to find the “low-cost fruit” first. By that we mean that to meet the demands of management, middle management will identify superficial savings in the hope of meeting the requirements. Therefore, switching from disposable cups to cups or reducing dugout facilities often goes in the first cutting block.
Unfortunately, while there may be some superficial savings in such places, introducing significant efficiency for any business is at a deeper level and requires a deeper process to find problems with the way things are done internally. The methodology for finding these “money holes” in business is often called “Process Improvement.”
The concept of process improvement is to diagram a particular business process from start to finish and document the stage it goes through, present authority to the process, and point out places where inefficient methods lead to excessive costs in conducting that process on the way to the final stage of process completion.
Routinely, the areas of the business structure most frequently identified as candidates for process improvement verifications are…
Excessive overload between departments.
Departments in business are known for taking on the atmosphere of fiefdoms and becoming resilient if they are unprepared towards other departments of the same company. When that happens, the department manager will introduce unnecessary documents and processing to get the “work” moved to your department from another or for the completed work to continue on its way. This excessive overhead can be costly at the departmental level and hinder the business as a sufficient unit to actually reduce the profitability of an organization.
Business processes move through the organization because each department or entity adds value to the process until the completion of the work. However, if communication between departments or people along the process chain is flawed, the process can stop and wait for hours, if not days, before the lost communications are found and work is put into a cycle to be completed.
This slowdown or breakdown in communication can be a tremendous drain on the company. To fix the problem, modern communication tools should be reviewed so that every important person along the chain is quickly aware of the work that needs to be done and can signal to the next agent that their step is complete and that the process is moving to the next stage.
Inefficient IT infrastructure.
Outdated computer programs that are not integrated with each other cause unnecessary work to retrieve data from one system and move it to the next computer program only to enter it again at the next stop along the chain. The standardization and integration of data and systems will introduce great efficiency into the process.
By streamlining the process of moving business requirements from start to finish, we can eliminate many of the inefficiencies and waste that have become inherent in that process. We can introduce updated integration designs at both the IT and process levels to quickly move processes from one department to another once completed. The result is an efficient organization that no longer “spends money” due to inefficiencies and therefore makes money “from the inside out.”