How to Use Our Business Tune-up Menu

This Tuneup Menu is a periodic review of the state of your business with a view to streamlining and removing poor practices that have crept in over time.  A good Tuneup will lead you back to best practice, better productivity and higher profits. Yellow Belt

The topic of re-vamping your business is dealt with in a lot more detail in our Campaign: C2.0 Optimise Your Business Enterprise in 100 Days (O100)

Set your goals

It’s critically important that you have a clear understanding of what you want to do with this project. This keeps you focused on what you’re trying to achieve and will help to have any members of the team and yourself focused on a common outcome.

Go to the article: How to do Goal Setting for Business 

or the Leaders Briefing: LB3: Quick Goal Setting for Time Poor (scroll down)

Prioritise

The steps below are likely to produce many tasks for you to carry out to fine tune your business. The steps in the menu below are ranked in the order thought to contribute most to your results in decreasing order of impact. Within them, there will be many tasks and they should be ranked in the 80/20 order.

Go to the Skills Module for greater detail: SM2.0: 80/20 Sales Growth; Double Sales, Triple Profits

Don’t Multitask

There will be ample temptation to do several of the tasks below at once to “maximise” your improvement efforts.  This will usually reduce your productivity, due to the adverse effects of multitasking, so take care to avoid that weakness. Much better to work though the most important one to completion first before moving onto the second and so on.

Read more at the article: Why Multitasking is Not Your Friend

Retune the Constraints in Your System

Use the methods in Theory of Constraints (TOC) to identify the constraint in your present production systems. This may have moved since you last looked at them and hence the importance of going back to reassess where it is presently located.. Once found, use the methods of elevating and subordinating to improve the throughput of your system.

Having re-optimised for your constraint, has that freed up any underused capacity that thou could sell without increasing your overhead costs and therefore adding to pure net profit.

Go to the Skills Module for greater detail: Theory of Constraints (TOC) Menu

Sort the Wheat From the Chaff

The 80/20 Rule says that just 20% of your staff will sell 80% of your sales revenue.  Twenty percent of your products make up 80% of your revenue.  There are a host of other similar suggestions of how to separate the “wheat” in your business results from all the “chaff” that obscures these vital few.  

Go to the Skills Module for greater detail: SM2.0: 80/20 Sales Growth; Double Sales, Triple Profits

Check for Over or Under Production

Check that the production of your system closely matches customer demand. If it underestimates consumer demand, you are likely to be selling less of your best selling products than you could and so you are missing out on income. 

If your production is greater than demand by your clients, you are likely to have an increasing amounts of inventory and work in progress. This is an expensive use of your working capital. Excess inventory should be reduced to free up this capital. You should also give thought to how this build up came about. Likely your production is not tied to customer demand or “pull”. You may have moved to Local Optima (link below).

You can estimate the cost of lost income and/or of surplus inventory. Refer to the article: Cost of over and under stocking (link below)

Inventory will not only build up at the end of your production system. It will accumulate anywhere production at one stage exceeds that required by the next step downstream. Some inventory may be correctly required for buffers but others stockpiles could be the sign of  production  out of step with the demand. Local Optima should be largely removed, in favour of filling just demand, by using a Kanban approach to manage when products are produced at each stage of your production system.

Read more at the articles:
Cost of Over and Under Stocking
How to Manage Local Optima Problem
How Kanban Improves Work Flow

Check Your Throughput

The goal of Throughput is to get the best profitability from your invested Capital.

Throughput is only realised when you get the cash at the end of the line. Check that your account receivable processes are effective.

Go to the article: Change Your Accounting Mindset with Throughput Accounting

Multitasking

Multitasking is part of human nature and will tend to creep back into any human endeavour.  It can be very wasteful.  Read up on its cost, how to identify it and steps you can take to remove it. Then look for these signs in your business.

Go to the article: Find the Hidden Danger of Multitasking

Accounts Receivable Health

Throughput teaches us that Profit is not realised until the money is actually in our hands.  Large Accounts Receivable are treated as an asset in conventional accounting but that gives a bit of a false sense of comfort.  Much better that those outstanding accounts are converted to cash; a better type of asset to have.  

Go to the article: How to Boost Your Accounts Receivable

Eight Types of Waste Analysis

There are eight types of waste that can creep into your business.  Run through the list systematically checking for any issues that now arise. 

Go to the Skills Module for greater detail: SM4: Waste/Muda Reduction

Risk Management System

Your business will have levels and costs of risk that reflect the sort of industry you are in.  You should construct, and periodically review, a Risk Management System to reduce and manage risk and their costs as best you can. Also take the opportunity to review your insurance cover which is the last defence against some unmanageable risk.  

Go to the article: How to Build Risk Management Systems

Other things to consider

Specialisation: especially in small businesses, the comparatively few staff often can, and may need to, do everything. As the business grows, there will be increasing opportunities for the efficiencies that can be obtained through specialisation.

Check metrics

See that Metrics are producing correct messages. If your systems have got out of kilter since the last time you tuned the business, and you have been watching them, there are probably some wrong Metrics or missing ones in the areas that have got out of balance.  

Go to the article: Importance of Metrics for Profit