Don't let your profits go to waste

I was eating breakfast with my son Caleb yesterday and I noticed that he left his crusts on the plate.

"Caleb," I said, "do you know how many kids in the world would beg for scraps of food like you are wasting there?"

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Watching him made me remember my parents' reminders, about the millions of starving children in China who would love to eat the food I was wasting. My grandmother, having lived through the great depression of 1930s, constantly reminded me that those who "waste not, want not."

I am still to this day conscious of my waste and consumption.

So how do a few crusts on a plate have anything to do with business you might be asking? Well, what we do at home usually is consistent in other parts of our lives. If we treat our family badly, we are probably treating our staff badly. If we are sloppy at work, we are probably sloppy at home. If we pay attention to things at home, we are probably paying attention to details in our business. If we are careless with our resources at home... you get the picture.

As Canadians, we have had it pretty good for the past few decades. We have managed to ride out the waves of the big economic hits that the U.S. had in 2008 and 2009. We have had house prices climb for 20 years.

Our population has increased across the nation. We have had many sectors of the economy with periods of sustained growth that has have enabled people to have steady jobs, which has in turn fueled small businesses. The government has pumped billions into the economy for capital projects (which still must be repaid by future generations). There has been a low inflation rate for 20 years and this has helped ensure that many businesses have been able to keep control of their costs and remain profitable.

It's true that there is a large percentage of the small business population where the owners are not living in luxury and aren't satisfied because they are only marginally profitable or not profitably at all. On the whole, business in Canada has had a pretty good run.

There are sectors of the marketplace that have experienced transformational changes due to technology. Overall, the economic stability of the past couple decades has allowed many business owners to grow fat and many organizations to become complacent.

So why, if times are still pretty good, should we consider looking at waste in our organizations? This is like my son saying "Dad why should I worry about a few crusts while we have the whole loaf of bread sitting on the counter?"

It's not just the concept that there is more where that came from, it's the realization that the taps to our good life could be turned back at any time.

One only has to consider the record levels of government and personal debt in this country to understand that we can't continue to live the high life forever.

Sure, the government might start printing more money and inflation could reduce the personal debt/income levels. Or will it? Increased inflation means increased interest rates as investors need a greater return on their investments to cover their loss due to inflation. This means that interest rates go up, there are more bankruptcies, house prices drop, there is less construction, and the economy starts to shrink as investors pull in their money.

I remember buying my first house in 1989 and paying 14 per cent interest. I have been in African countries with high inflation rates. It's not a pretty scene. But it's like telling your kids that wasting food affects kids in other countries.

Sometimes it doesn't sink in until they see it first hand.

When we think about waste in businesses, there are a number of places that most organizations could typically look at and find savings. In my book Profit Yourself Healthy, I focused a whole chapter on looking at waste in businesses and listed 107 areas of your business that you probably could find savings in.

The biggest areas for most businesses are in the fact that they are not thinking lean.

Lean is a concept originating from Japan but is developed on the concept that businesses can lower expenses and become more profitable with a "just in time" mentality. This means that we look for ways to produce and deliver our products or services as efficiently as possible in order to supply our customers with the highest quality products or services in ways synchronized and systemized to reduce waste.

The biggest waste areas in most businesses are in the areas of energy, people and inventory. When we don't have efficiencies between departments; when our ordering is not in sync with customers needs; when our systems don't ensure that our employees are working efficiently or accountably or when our quality doesn't meet our expectations each and every time, we have waste.

Waste always has a cost. Usually that cost is monetary. When small businesses report they are only marginally profitable or not profitable at all, they should be considering how they can reduce their waste. If waste equals money then the "waste not, want not" motto should be applied. It might only seem like a few crusts or crumbs but those crumbs add up and before you know it, the savings you have might lead you to be rolling in the dough.

Dave Fuller, MBA, is a certified professional business coach and the author of the book Profit Yourself Healthy. Waste no time in emailing your crumbs of thoughts to dave@profityourselfhealthy.com

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