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Print ArticleFor example, investing in heavy machinery or new product lines, while projections look hopeful, will also change staff routines and affect balance throughout the business. It may amount to a pretty high-stakes gamble. However, small procedural changes in specific areas can return surprising results.
Making small adjustments to achieve large results is what the principle of “trim-tabbing” is all about. It gets its name from an energy saving device on a ship’s rudder. The idea is that instead of trying to move a 50-ton rudder against the water, you just move a small tab on the trailing edge, and let the water move it for you.
To apply this principle in small businesses, look for a trim-tab that affects the area of concern, rather than trying to shift the big problem. Maybe at times valuable employees will be polishing equipment and cleaning closets. What might be done upstream that could smooth out seasonal rushes and slow times?
Attention to intake systems, such as marketing or bidding and estimating, might reveal ways to compensate for these fluctuations. The bidding process can provide good opportunities for the kind of fine-tuning that can keep profits up and costs down, and even increase throughput. Upgrading equipment, when it only means obtaining a couple of new laptops and some good software, can be a very cost-effective investment that returns unexpected benefits downstream.
With any pricing software, setup can be burdensome, and if not, it may be inadequate. A certain level of complexity is required by the sheer number of possible combinations of components a customer may desire. Traditional methods have had to trade precision for simplicity, just to get the work done reasonably quickly. When moving the process to computers, duplicating old methods may be tempting, but can defeat the purpose. It doesn’t help much to do the job faster if we don’t discard the compromises — trading off precision for speed, for example — that we no longer need.
Simplifying the process traded off precision for speed, because the time saved was more expensive than materials or labor that may have been overestimated in the simplified process. If we merely speed the whole thing up through automation, the fudge-factor impact is also multiplied. To make this transition as powerful as it can be, we need to use the computer to handle all of the complexity in the background and good software to make the operation simple and transparent at the front end.
Effective trim-tabbing comes in when we use the combined leverage of precision and process automation because the smallest item now produces preset profits, where before there may have been built-in hidden losses.
Sailing along a shore in a high wind is not necessarily a terminal situation. As long as the vessel is still moving, not taking on water, and nothing critical has parted, we stand a better than average chance of arriving safely in port, with a good story to tell over warm drinks. Small business owners are not stay-at-home types, and things get rough. When they do, there’s nothing like the leverage of trim-tabbing when you really need it.
About the author: Peter Barus is the creator of the original drawing-based pricing system for countertops, now available as Visual Pricing. For more information, contact info@visualpricing.com online or call 802-368-2809.
