Out of the Crisis.Org

[Louis Altazan]

John and Bob were small business owners. Both businesses were about the same size with seven employees. Things were getting tough for John and Bob. Unemployment was up in the area and people were not spending as much as they had in the past. Both men knew they would need to take action.

John, began by trying to cut his cost. He reduced every cost he could but profit was still low. John reasoned he would have to cut further. He studied production figures. By eliminating two employees, there should be enough work to keep the others busy. The “two least productive” people would have to go, and so they did. Cost were now lower but the business was still barely making it.

John figured he needed to get traffic into the business. He tracked daily sales and then hourly sales. He listed everything he sold and how much he sold of each. He selected a few common services and then posing as a shopper, called several competitors and noted their prices. He would set his price lower on these items. He reasoned, when people would shop around, they would think his business was the least expensive. Once they were in, he had a better chance of selling high profit items to make up for the loss. Sales of loss leaders increased but profits were not good. John is considering letting another employee go.

Bob decided to concentrate on improving the value of his service. Since things were slow, Bob used this opportunity for training. Not only job training but quality training, training in systems thinking and problem solving. Bob began to read and study and provided time for his staff to do the same.

As each person learned new things, they would discus these with other staff members. They would explain what they had learned and how this knowledge might be applied. Several projects were drawn up and Bob and his staff worked on each. In this way everyone was kept busy. Some projects resulted in improved service. Others removed obstacles to production. They statistically tracked their progress and everyone was involved. Soon jobs that previously took three hours were being completed in two, and with far fewer problems. Bob could now bill clients for two hours and still make a full profit. Business picked up and Bob had a full crew to capitalize on the opportunity. Bob is considering hiring some of John’s ex-employees.

_________________
Louis Altazan
Owner/Manager AGCO Automotive Corporation
Baton Rouge, LA

[MattFMN]

Cutting, cutting, cutting..... You see it all the time, but it rarely works. Is this caused by listening to the accountant? Misunderstanding a "lean" company or operation? Fear?

Thanks, Matt.

_________________
Matt Fanslow
ASE CMAT/L1
Crag-Technologies, Inc
www.wavehook.com

[Louis Altazan]