In any business, there are crucial decisions to be made about pricing, product, sales, accounting, marketing and hiring. Larger organisations rely on teams of employees and consultants who pool experience, knowledge and resources to make the business decisions that impact the company’s operation and growth.
Small business owners rarely have that luxury. Entrepreneurs are typically the sole decision-makers, wearing many hats and solving problems through trial and error. Their personal investment in the business makes it challenging to base decisions exclusively on facts and data, rather than emotion.
Taking a page from the corporate playbook, however, small business owners can use a proven, problem-solving methodology that results in greater efficiency and profitably. Six Sigma for small business can reduce mistakes and waste, uncover hidden costs, streamline processes, improve overall quality of products and services, and increase customer satisfaction.
Why Six Sigma is Important
Small business owners often discount Six Sigma because they think it isn’t applicable to their business. In reality, the methodology can be applied to nearly any chronic problem or “defect.”
One example: The owner of a seafood restaurant often advertises an all-you-can-eat special on crab legs. Half the time, however, he runs out of crab legs before the end of the evening. That same owner regularly throws out pounds of spoiled food. Both incidents represent defects that can be eliminated or significantly reduced using Six Sigma to define and measure the problem. The solution is buried in the receipts and sales data over time. We know how many people are coming to eat, we know how much inventory is consumed, but the owner does not numerically associate the inventory input to the output over time.
The list of potential problems is endless and different for each business. What all have in common, however, is the negative impact on a company’s bottom line. Every mistake or problem results in waste, a loss in terms of time, customer satisfaction or money and, ultimately, profit. Time is perhaps a small business owner’s most precious commodity. Exerting time and energy to address recurring problems is inefficient and compromises profit. Likewise, unhappy customers can cripple or close a business, since small businesses typically lack the variety, resources or volume to overcome a dearth in customer satisfaction. Six Sigma shows small business owners how to ask the right questions and uncover and eliminate waste and defects that may be erroneously accepted as part of the processes and considered a normal “cost of doing business.”
Implementing Six Sigma
The heart of the Six Sigma methodology is DMAIC: define, measure, analyse, improve and control. The best project is the one that will provide the maximum payback. To find it, business owners must consider the probability of success and the effort required in terms of resources and time in relation to the return on investment. A good rule of thumb is to select a project with a low ratio of effort to impact.
Let’s use our seafood restaurant and its spoiled food as an example. (Running out of crab legs during the all-you-can-eat buffet is a different problem, also solvable using Six Sigma.)
During the past six months, the cost of spoiled food was R115 127, an average of more than R18 000 per month. The objective of this Six Sigma project is to reduce this “defect” by 50%, achieving a cost savings of R9 000 per month.
Using receipts, stock levels and purchasing records, we ensure that these records accurately represent the continuous level of waste. We perform a “measure system analysis,” which compares what was ordered by the owner to what was purchased by the customer, and repeat this comparison for the past two months. You may find that some records were recorded in error, but now we have a measurement system that is repeatable. We have our problem definition, the defect being the cost of food not consumed by the customer that spoiled per week; and we have our business metric: wasted money on inventory.
We define a metric by analysing the data, from which it can be determined that 75% of the wasted rands is coming from two sources: beef and high-end fish products. We further determine that of that 75%, the fish products accounted for 80% of the problem. We verify that the source of information is repeatable for the past eight weeks, and the receipts confirm that is, in fact, the case. During the analysis phase, additional defects may be uncovered, such as order delivery times being longer than they should or a short supply of crab legs, thus accounting for the shortage of crab legs during the all-you-can-eat specials.
We have determined that for three foods – beef, high-end fish and crab legs – the amount ordered doesn’t match the consumption rate. Therefore, an 80% reduction in the ordering of the slow-consumption foods – the beef and the fish – will yield a savings of R9 000 per month. Increasing the amount of crab legs ordered lowers opportunity costs by having a supply of crab legs that meets demand during all-you-can-eat specials.
To prevent recurrence of defects, we track our shortages and overages and place “threshold spending amounts” – maximum amounts spent based on inventory – on each major food category. A graph of the previous day’s orders and shortages or overages is created daily, with results reviewed weekly. Based on end consumption rates, an action plan is put into place, including such components as a more accurate buying guide and menu adjustments. The “test” of the action plan are the customers voting with their wallets.
Key to consistent growth and success for any business is the ability to monitor changes, spot problems and opportunities first, then act accordingly. It’s tempting to react impulsively or emotionally when faced with a business decision. However, maintaining long-term, reliable growth requires well-developed methods of tracking business goals related to factual income, expenses, growth and quality. Just as entrepreneurs don’t stop tending to their businesses once they are established, neither does Six Sigma stop with the completion of a project. It is vital that small business owners maintain momentum by picking new projects, creating new deployment teams, committing additional and new resources, and continually improving businesses.
What To Look Out For When Seeking A Mentor Or Coach
There is value in choosing a mentor or coach to help you build your business, says Dr John Demartini. Here he offers some sound advice on how to go about doing this so that you benefit from the experience.
When I was in practice I noticed many doctors attempting to build a business would seek out mentorship from management consultants, from people who have already been down that path. And there’s wisdom from learning from foresight and not learning from trial and error. But there’s a pitfall – I noticed that not everybody is able to do or sustain the actions that these consultants would suggest. Where some would follow and immediately go and succeed, there were others who would sometimes feel self defeated because they couldn’t sustain the actions that the consultants would suggest and recommend.
So a small percentage would excel and do extremely well. But there were those who would spend their money on the coaching and they’d never get anything in return. So the question is – what made the few excel with the help of a coach, consultant or mentor? And why is it that the majority of them didn’t do as well? And it boils down to how congruent the actions of the coach or consultant are with the values of the person that’s striving to build a business.
I have listened to numerous professional consultants all offering slightly different information about how to build a business. I have taken and learned from all of them. Some of them would suggest things I just couldn’t do – it just wasn’t me – and other things that I could do. And when I couldn’t do something, the coaches and consultants believed I just was not disciplined, not driven. They would imply that I didn’t have the drive… Their material works, but I wasn’t following it.
And those of you who have had the same experience will understand what I’m saying. And you need to know that the reason you don’t do what these coaches suggest is because it’s not aligning to your values. So you are labeled lazy, undisciplined, not driven. You are given these labels instead of realising that you’re self defeating because what they suggest is not congruent with your values. And so you go to different consultants until you finally find the one who matches, whose values are aligned with yours.
So it’s important to not envy and imitate somebody with a drastically different set of values. If you’re seeking a coach or mentor, make sure the coach/mentor has a value system that is closely enough aligned to yours or you will be setting yourself up to fail. Just because somebody is successful doesn’t mean if they are your coach or mentor that they will have the values that will lead you to that same form of success. You need to either shift your values to be able to succeed in their system or you need to find the mentor that aligns more with your values. Otherwise you’ll be beating yourself up thinking there’s something wrong with you when there’s nothing wrong with you. When you find the right mentor, you will take off.
So you either have to change your values to match the objectives of the coach, or change the coach to match the truth of your own values.
So the bottom line is, if you’re going to get mentorship, coaching or consulting from somebody, don’t just select the person because they’re successful. Select them because they’re successful and they have some alignment with your mission and your values. Make sure you select your mentorship and a consultant that is truly valuable to you; don’t live in a fantasy about who you are.
The Link Between Scaling, Relationship Building And Technology
It is the first solution of its kind in South Africa, this platform supports entrepreneurs to effectively establish legal foundations in their businesses for optimum growth and overall business success.
The challenges and opportunities of this new world and that the world is more connected than ever. The constraints of distance is no longer applicable and as a result business has little constraining borders. Networking is therefore still a component in key relationship building.
It brings me to my real point – in a world so busy and connected, what we cannot make more of is time and time, unlike any other commodity is invaluable when it comes to forging important relationships and sustaining them. So, if technology can break barriers when it comes to legal cost and time spent on it… why not? Especially when so many have experienced the consequences of not documenting the most important relationships in their business.
The SchoemanLaw SME Self- Service DeskTM is the ideal tool for any member-based organisation wanting to capacitate and empower members. It is an affordable and reliable online solution for start-ups and SMEs, where Users can customise and download their own contracts online and in minutes. It is the first solution of its kind in South Africa, this platform supports entrepreneurs to effectively establish legal foundations in their businesses for optimum growth and overall business success.
The following documents are examples of those available on the platform (currently hosting over 35 documents / agreement types):
- Confidentiality and Non-Disclosure Agreement (“NDA”)
- Independent Contractor Agreement
- JV Agreement
- MOI and Shareholder’s Agreement
- Supplier Agreement
- Letter Demanding Payment
- Various HR Documents and Company Resolutions
- BBBEE Affidavits (EME and generic QSE)
and many more!
Prices range from R195 and R895 per document if downloaded on a pay- as- you- need- basis or R249 / R495 per month on a subscription basis, this is over 75% less than usual rates if traditionally drafted by an Attorney. What is more, Users have the support of a Law Firm not only having created, but who maintains the platform and supports each User. We even offer customisable solutions. So, there support and a solution for any business regardless of size and industry are on offer.
The platform is easy to use, no prior legal training is required, and Users are supported through help texts, free podcasts, videos and training events. In the case of a legal incident occurring, you can consult with an attorney with the click of a button.
The platform is also ever evolving and completely customer- driven. Documents are added as and when customers request them. All the documents are also frequently updated to ensure that they align to the latest best practice. There is no need to leave your legal needs unattended ever again! The SchoemanLaw SME Self- Service DeskTM therefore ensures that SMEs are no longer invisible and capacitates them to free up time needed to build relationships, grow and scale their businesses.
Empower your business today, go to: https://www.schoemanlaw.co.za/online-legal-services/
To Survive And Thrive, You Need A Growth Mindset
The business case for a growth mindset is not what you think it is — if you’re serious about success, you need to start believing in yourself.
Any leadership and personal mastery principle that booms in popularity is ripe for misinterpretation. Growth Mindset has been hailed as one of the defining leadership principles of top international companies and is believed to be one of the core skills that will keep individuals future fit in disruptive times.
Despite its popularity and importance, many companies still think a growth mindset is about the profit growth of a business. It’s not. And if you don’t know what it really is and how to apply it, you and your business might not be around to grow at all.
Growth Mindset is about Belief in Ability
Studies that we have done at the NeuroLeadership Institute (NLI) have shown that many businesses still believe that having a growth mindset means keeping eyes towards profits and striving for business growth.
Having a growth mindset is really about the continuous belief that improvement is possible and that failures are opportunities to learn. It is much larger than the objective of improving earnings, although applying a growth mindset makes one more resilient and engaged in times of change, which can only improve earnings overall.
Another study completed at NLI revealed that there are five reasons why businesses are applying a growth mindset to drive business success.
1. Digital Transformation
The most popular reason is to stay agile in the face of technological uncertainty. Digital technologies are continuing to disrupt the way that we do business and a growth mindset is put forward as a priority to ensure businesses thrive through digital disruption.
2. Business Improvement
A growth mindset encourages feedback and continuous improvement and many businesses look to embed this when they are streamlining work streams, teams and business processes.
When organisations are pivoting they use a growth mindset in their approach to reinvention of culture, operating model and leadership challenges. The growth mindset principle of seeing challenges as opportunities and not threats has an impact here.
4. Growing up
In an effort to scale a business, organisations see the benefit of applying a growth mindset to navigate the challenges and turmoil that accompanies growth.
5. Performance Management Transformation
Some businesses interview for and reward demonstration of a growth mindset. This means that they value improvement over time as a priority.
Clearly a growth mindset has business success at the core of its value-add to many organisations. It helps businesses be more agile and engaged during change, but how does it work, and how can we cultivate it?
When faced with a challenge we either tackle it head on, hoping for positive results, or we shy away from the challenge, feeling inadequate. In the brain, this is caused by how we view the challenge. If we view it as a threat, our body reacts with duress (negative stress) and we don’t prioritise our best thinking, going into survival mode instead. But if we view it as an opportunity, our body goes into euress (positive stress) and we are energised, our body is able to prioritise its best thinking. This type of behaviour can be categorised into two groups, that of a growth mindset and a fixed mindset.
Psychologists have studied these behavioural traits and found that individuals who believe in their ability to succeed are seen to have a growth mindset, whereas people who give up instantly or constantly harp on the negative aspects of a situation are seen to have a fixed mindset. Therefore, a fixed mindset sees no room for improvement and in return devalues their ability to perform.
A fixed mindset is linked to a belief that our ability is fixed and a growth mindset is linked to the belief that our ability can be grown. The surprising finding here is that our default wiring is wired to that of a fixed mindset.
Creating a Growth Mindset
Researchers have found that to incorporate the growth mindset into organisations, leaders should focus on factors such as transparency, empowerment and development.
With the digital age that we are currently living in and even trying to adapt to daily, organisations need to constantly reinvent, improve and manage performance based on digital transformation. A growth mindset assists in the rapid changes that organisations face even on a digital platform.
For a growth mindset to be established in organisations, management needs to lead the overall process. Thus, there needs to be a shared language. To ensure that there is a shared language, managers should encourage employees to build the right behaviours, and have systems and processes in place that promote a growth mindset throughout the organisation.
This can be done by:
- Valuing and rewarding progress in others
- Focusing and highlighting learnings from mistakes and challenges
- Role modelling this behaviour.
Researchers have shown that a growth mindset can have measured benefit in organisations. An internal survey at a technology company showed that 92% of employees agree that learning is a lifelong exercise and 82% of managers displayed growth mindset behaviours. The growth mindset enhances the quality of an organisation for the greater good of future and current employees.
When calamity strikes in organisations, the growth mindset aids in seeing change not as a threat but rather as an opportunity to improve based on a positive mindset.
Shifting Away from a Fixed Mindset Approach
A fixed mindset hinders progress. For businesses to prosper, there needs to be an attitude of constant learning, even when failure occurs. There are certain things one can do to shift your fixed mindset to a growth mindset.
Firstly, eliminate any thoughts of inadequacy. Your thoughts determine your actions, therefore shift your thinking to that of a “can do” attitude. You need to recognise your potential, understand your abilities and that they can be improved, and know that stressful situations are opportunities to learn and grow, rather being a threat.
The minute you find yourself in a fixed mindset with a negative thought process, talk yourself into remembering your capabilities. Try replacing those negative thoughts with, “I know that I am not excelling in this area, but I am going to learn how to improve and come back stronger than before”.
A growth mindset is a phenomenon that you must constantly think about and instil in your daily life, both on a personal and professional level to see positive results, remembering that you are in a cycle of lifelong learning.
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