Ask any lean practitioner, "Do I have to spend money to go lean?" I’d be willing to bet 99.9 percent of them say that lean is a state of mind and you don’t have to spend a penny. Well, I have been both penniless and trying to be lean and now having a few bucks in the bank. I’m gonna give you three guesses at which one I like better!
This sure does sound like the old question of what came, first the chicken or the egg. But in fact, it’s a lot more along the lines of Rome wasn’t built in a day.
Not the steroids
Let’s begin with the precursor that companies practicing lean at a high-level are generally extremely successful, but that doesn’t mean that they were broke and everything was going wrong until they started practicing lean. Probably the best analogy I could think of would be relating lean manufacturing to bodybuilding, adding lean thinking to your organization is a lot like a bodybuilder taking steroids. You start with an extremely fit, muscular and determined human being and turn them into what looks like a Greek God chiseled from stone, and generally the size of a dinosaur.
However, it’s not the steroids that made them huge. It’s going to the gym two times a day, it’s eating enough food to feed a small village, it’s having the grit to work through the pain of injuries and the discipline to control every aspect of their body. There is not, has never been, and never will be, a Mr. Universe contender that just takes steroids has never been to the gym, and considers the Big Mac combo a nutritious meal.
So what does that mean for us in the wood manufacturing world? It means if we don’t have the basics down and a sound business model, no amount of lean principles or application is going to save the day.
Plug the holes
We all know the best time to start your lean journey is right now, so don’t confuse this message with putting off lean until you get your ducks in a row. It just means if you’re struggling, and there’s holes in your boat, you’re going to have to simultaneously implement lean and plug the holes. If you ignore the signs of bad business and just start implementing lean principles you may end up with a very lean ship at the bottom of the ocean.
You might be wondering how do I know what a bad business model looks like. Well friends, I spent 20 years unknowingly stuck in one. I now have a keen eye for the signs that someone is stuck in the doom loop.
So if you find yourself trying to figure out how to make payroll on Friday, falling behind on bills, struggling to pay vendors, or you are borrowing money to stay afloat. The reality of that situation in two words is "bad management," And if you find yourself forever borrowing money, all you’re doing is allowing that bad management to continue just a little longer. The moment I owned the fact it was my own bad management – let’s face it, the numbers never lie – it empowered me to fix it. It’s not all doom and gloom. I have great news: It’s actually easier to fix than you might think. Start with looking into these three things:
1. Do you have adequate demand for what you’re producing?
The key word here is "adequate." Perhaps you’re making something you’re incredibly passionate about, but there isn’t enough volume to support the business. Consider supplementing with another product line or investing in a marketing effort to get the demand up. Don’t eliminate the option to change altogether!
2. Do you have adequate facilities to produce it?
This just means do you have the knowledge, space, machinery and tools to compete in the market you’re in.
3. Are you being paid for it?
This sounds basic, however, there is a big difference between getting that big job and getting paid for that big job. All too often we look at our "sales" to determine whether or not we’re making money. But if you are not collecting 100 percent of those sales dollars OR you are waiting too long for the money, then this could be at the heart of your struggles.
If you’ve answered no to any of the above, make sure you add the corrective action to your to-do list along with your lean implementations. Get the opinion of some outsiders. We entrepreneur types tend to see only the positive side. If I had a nickel for every time I said "next month will be better," I’d be rich. I wish I’d had the humility to ask for another opinion much sooner, because that opinion changed the course of everything I do.
If you’ve answered yes to all three and somehow the finances are still a struggle, this is great news! A lean initiative will probably skyrocket you into profitability!
Number 3 was my 20-year doom loop. We were doing beautiful commercial millwork, had a high tech factory and we were practicing lean, yet the struggle was real. It wasn’t until we absolutely had nothing to lose in the middle of a big apartment project, I told the contractor, "I am walking away from this project unless I can get paid for what we install every Friday, first missed payment, I’M GONE!"
What happened? They paid us every Friday, and for the first time in 20 years we got a taste of what a business should run like. We didn’t realize how crippling waiting for money was until we didn’t have to wait anymore. Everyone’s situation is different. Just be sure you are being paid what you expect and in the time frame, you expect it.
When you have the business basics down, and your P&L sheet is no longer in the red, you will absolutely love what happens when you go lean.
If you have been reading this thinking, "That’s not me; we already have a healthy company," there is a trap in there for you as well. I call it the "good enough" trap. Where you have a 5 percent to 15+ percent net profit and you just can’t imagine it getting any better.
Numbers like that mean you are really good at what you’re doing in your business, you will likely be hard to convince you need to learn and teach your people something new, experiment, try seemingly crazy things and let your people make mistakes. If you are avoiding lean due to the "good enough" trap, you are leaving mountains of cash on the table, and I mean mountains.
Remember, on your lean journey, the better your business foundation, the better the results will be.
Is your company going to the gym twice a day? Is it eating right? Do you have the grit to keep learning, and most importantly, do you have the discipline to lead the lean charge?
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