Small Business Operations

Importance of Continuous Improvement

Written by Andrew Goldman for Gaebler Ventures

Thinking about how you can improve your company? In order to increase profit margins and develop better customer satisfaction, small businesses must embrace the idea of continuous improvement.

The basic idea behind continuous improvement is that there's always a better way, and never a best way.

By seeking out the "better way", small businesses can make significant improvements to quality, efficiency, employee satisfaction, customer service and ultimately the bottom line.

Whether you are in a service or manufacturing industry, the cost of materials and labor used in your operation is likely to increase over time.

As a result, any improvements that can be made in your process will result in savings necessary to offset increasing material costs. If your small business is to stay viable in the long run, you are going to need to embrace continuous improvement.

When Do You Try to Improve Your Business?

In many cases, the hardest time to implement continuous improvement techniques is when things are going well.

Profit margins are acceptable, waste is perceived as minimal, employees are happy and sales are strong. The problem arises when you're not seeking to improve your process, and you're simply treading water.

Even when things are going well, there is plenty of room for improvement. There are always opportunities to eliminate defects, bolster employee knowledge, increase cleanliness, and improve overall organization. Everyone in your company needs to feel they must improve on a monthly, weekly and even daily basis.

Improvement Can Be Difficult

One major enemy of continuous improvement is ego and self-perception. When I consult for small businesses and discuss the concept of continuous improvement, many managers are reluctant to make changes.

As with anything, change can be difficult. Moreover, when you tell an employee there may be a better way to complete a task, the employee may take this as a personal slight. For effective continuous improvement standards, all staff members need to understand how change and improvement are fundamental principles of any successful team.

There is no room for egos when it comes to building a successful business. Don't let emotional attachments get in the way of improving your processes.

Advantages Over Your Competitor

Companies that accept continuous improvement as part of their operations, maintain significant advantages over competitors.

For the small business, where many of the processes are being tried for the first time, continuous improvement standards can be of tremendous help.

When thinking about continuous improvement, I often use the example of a cook in the kitchen. Imagine a restaurant-sized kitchen where the idea is to produce two fancy pasta dishes.

The first time the chef walks into the kitchen and prepares the dish, he does not have the benefit of previous trials in that same kitchen. As a result, you would expect his process to have plenty of flaws. Rather than duplicate that first preparation for future orders, the chef will continually make incremental changes (for example, moving ingredients closer together for convenience) in order to reduce the overall cycle time for the dish preparation.

Make sure your processes aren't a duplication of the initial run. Remember there's always a better — and never a best — way to run things.

Andrew Goldman is an Isenberg School of Management MBA student at the University of Massachusetts Amherst. He has extensive experience working with small businesses on a consulting basis.

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