Lean Practices Could be the Key to a Post-Pandemic Small Business Revival

Right now, the vast majority of small businesses that are still operating during the coronavirus (COVID-19) pandemic are doing so in a limited fashion. And they're the lucky ones – as over 100,000 small businesses have already closed in the US alone in the wake of the pandemic-driven disruption. And for most of those remaining, calling their financial situation tenuous would be a generous assessment. For them, finding ways to be more productive and more efficient is now a matter of survival.

Fortunately, there's a business management style that seems tailor-made for this moment in economic history. It's called lean management, and it may be all that can save a significant number of small businesses from extinction in the coming months. To elaborate, here are the ways that small businesses can benefit from lean operating practices and why they may be the key to the economic revival of the global economic engine.

What are Lean Management Practices?

As their name suggests, lean management practices are a set of business operating principles that call for peeling back the layers of a business's operation until nothing but the bottom-line boosting essentials remain. In other words, it's all about efficiency and a never-ending mission to improve in all areas of business operations. As you might imagine, it's a practice that can create plenty of opportunities for savings on operational overhead. It can also help improve profit margins by streamlining profitable sales functions – making each sale worth more to the business's bottom line.

The Major Components of Lean Management

In the abstract, applying lean principles to a business is a straightforward process. To do it, businesses have to engage in a process that works to:

• Identify value generation – Figuring out exactly what the business does (or doesn't do) to generate value for customers.

• Map existing processes – Taking an end-to-end look at everything that the business does to deliver the identified value-generating products or services.

• Eliminate waste – Removing anything from the mapped processes that is redundant, creates delays, or adds costs with no clear benefit. Also, to identify opportunities for cost savings, including on labor, fleet operations, and raw materials procurement.

• Shift to on-demand thinking – Working to orient all business processes to accommodate existing demand. In manufacturing, this means employing just-in-time procedures to eliminate overhead and the need to produce more product than has sold. In retail, it can mean hiring employees based on known demand, rather than upon demand projections.

• Apply iterative improvements – Reapplying the above tactics on an ongoing basis to identify additional opportunities for improvement, efficiency, and cost-savings.

Why Lean Management Matters Right Now

Although it should be obvious, lean management is particularly relevant right now because it offers an all-encompassing approach for small businesses to squeeze every bit of profit out of their operations while remaining laser-focused on the needs of customers. It makes for the perfect antidote to the present economic situation – either as a short-term survival tactic or a long-term recovery strategy.

And right now, small businesses need all the help they can get. Experts are already predicting another big wave of small business closures in the US, and the situation isn't much better elsewhere in the world. And, failing another major economic intervention by the world's governments, small businesses won't be able to continue to get by without either making painful sacrifices or finding ways to do more with less.

The Bottom Line

In truth, the adoption of lean practices by more small businesses will be a net benefit for economies and consumers everywhere. Since they help to reduce costs, they also tend to have a deflationary effect on product prices in the industries they affect. So, the sooner small businesses that opt to utilize lean management practices as a part of their survival and recovery plans, the sooner hard-pressed consumers can start spending again and generating the beneficial economic cycle that drives growth. In other words – everybody wins.

So, as the world moves through – and eventually past – the ongoing coronavirus pandemic, the surviving small businesses of the world have a challenge ahead of them. But within that challenge lies the opportunity to emerge stronger, more efficient, and more competitive than ever before. Lean practices offer a time-tested route to achieving those results. And all business owners and managers have to do is use them to adapt and overcome the hurdles that lay ahead.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes