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Downsize your company wisely

Downsize your company wisely

Streamlining your business is not necessarily a negative choice.  There are many advantages to downsizing your business operation to a more manageable level. It helps to prune down the hedges to allow new ideas to flourish, reassess your corporate culture and market position, re-distribute resources and employee responsibilities, cut costs, and identify shortcomings in terms of in-house training, customer service, and lean management to create value and initiating a philosophy of continuous improvement.

Words by Theresa Lütge-Smith


Any process that does not add value – that which customers are willing to pay for – should be revamped for optimal flow or even eliminated. Done successfully, streamlining your business not only reduces overhead costs of non-value-added activities, but also improves customer satisfaction by bringing their needs and requirements into alignment. In brief, the process of downsizing your company wisely should focus on continuous improvement. The purpose of lean management is to adapt to change to get the right things to the right place at the right time in the right quantity to achieve perfect work flow.

Maneuver Economic Recovery

Staying resilient through tough economic times is undoubtedly difficult. Even marginally economically sound companies are downsizing, rightsizing, and even capsizing. Dire financial pressures routinely thrust massive changes on businesses, necessitating entrepreneurs to prune down the hedges to allow new ideas to flourish, reassess their corporate culture and market position, re-distribute resources and employee responsibilities, cut costs, and identify shortcomings in terms of in-house training, customer service, and lean management to create value, and step up to the plate by giving their company a much-needed face-lift. Firms are being urged to export more goods to help South Africa achieve a sustainable economic recovery. If entrepreneurs fail to broaden their horizons, we consign the country to the certain fate of becoming a marginal, bit-part player in the global economy.

Retain Staff, Boost Skills

As an innovative business owner or manager you may be averse to throwing in the towel just yet. Pushing harder to increase sales and revenue or having to downsize by selling off part of the business are but two redeeming features in today’s economy to help a company stay afloat, but cutting back on staff could result in negative consequences. A short-term solution to cut back on operating expenses is to decrease the amount of hours each employee works rather than dismissal. Most employees would rather work fewer hours than be laid off, despite a smaller paycheck. Scaling back will naturally have an effect on morale as the shock of new procedures and employee responsibilities and less pay take hold. In downsized companies there is an emphasis on inter-reliant management—managers customarily walk around, observe what’s going on and communicate with the people doing the work. Consequently, most employees react positively to this constructive leadership approach and demonstrate resurgence in pride of work and increased productivity. After closely monitoring progress, managers engage with employees involved in the occupation—often asking why things are done a certain way, and whether the employee can recommend a better approach to facilitate productivity and eliminate waste.

Change the business model by identifying key areas where cost savings could be achieved. Would altering the current business model impact negatively on the level of service customers have come to expect from the company? Would streamlining the company cause it to be more profitable? Are employees adequately qualified to sustain a positive company workflow or should job rotation and in-house training programs be initiated? In order to re-distribute resources you will need a comprehensive snapshot of your company overview that includes Business Description, Mission, Goals and Objectives, Stock History Chart, Core Competencies, Yearly Financials, Company History, Executive Information, Corporate Hierarchy, Company Locations and Facilities, Competitor Information, Mentions of the Company in current news stories, Company Highlights, and Legal cases in which the company is involved.

Get your technology in tip-top shape by having your own static IP (Internet Protocol) address so that your suppliers, clients or anyone else can reliably connect to your server. Other attributes of a static IP address include hosting a dedicated website (allowing you to respond to queries for your domain name) or gaming site; connecting to email or chat servers, and important servers such as backup web servers, database servers, network equipment; VPN (Virtual Private Network) equipment (allowing people to remotely access applications, as well as easier back-up of important documents. Other examples of how technology can help you develop your business are  VoIP systems (cheaper than a traditional small-office phone system) and automated billing process to generate invoices, electronic transfers, e-mail reminders for late payments, file taxes electronically, option of paying smaller bills in advance, renew insurance policies on schedule. Ask your business broadband provider about this service. Visit (click on value-adds) to find out more about owning your own stand-alone static IP address for R55 per month.

Enlist your customers to streamline your business by tracking the daily activities of your target audience and then creating ‘decision simplicity’ to make it easy for them to connect and work with you. What do your customers do all day? What drives their thoughts at the start of the day? What is the toughest part of their day? What leisure activities do they prefer? What shopping methods do they make use of? Ask non-customers why they don’t do business with you; learn from their criticisms to inspire you to introduce change.

Rethink and adopt new approaches to your businesses by embracing new technologies and manufacturing opportunities that will distinguish you from your competitors. The ability to collect, process and interpret complex data is at the core of many business operations to drive productivity, competitiveness and prosperity, and allows you to more effectively communicate with consumers, perform risk-analyses and create new revenue streams. Connecting products, machines or entire factories can increase efficiency and reduce the loss of information. Follow a rapid improvement manufacturing process. Involve workers from multiple functions and levels within the organization, working together to address any problems as they occur and thus significantly improving the process.

The first challenge is to identify an appropriate target area for a rapid improvement event, such as areas with substantial work-in-progress or production area where significant bottlenecks or delays occur. Focus on a specific ‘waste elimination’ problem within that area (i.e. lead-time reduction, quality improvement, or production yield improvement). Managers typically assemble a cross-functional team of employees to engage in developing a clear understanding of the ‘current state’ of the targeted process so that all team members have a similar understanding of the problems they are working to solve.

This process is called ‘value stream mapping’, which involves flowcharting the sequential activities (step by step procedure), material flows, communications, and other process elements that are involved with product manufacture or transformation (e.g., transformation of raw materials into a finished product, completion of an administrative process). Value-stream mapping helps an organization identify the non-value-adding elements in a targeted process. Once data is gathered, it is analyzed and assessed to find areas for improvement. Ideas are tested on the shop floor or in process ‘mock-ups’. Ideas deemed most promising are selected and implemented. A key part of the implementation process is the follow-up activity that aims to ensure that improvements are sustained. As part of this follow-up, personnel involved in the targeted process are tapped for feedback and suggestions.

Contact Theresa ( for original writing.

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