Small Business Success Tips - Production
By Don Dewsnap
Of the many basic lies of business, one of the most destructive is that production has
to trade off between quality and quantity in order to maximize profit. Acting on this
false principle almost guarantees that a small business will only grow slowly, and not
very far.
Some trade-off is unavoidable. Some is necessary. A minimum amount of production must
occur to make a small business viable, even if it means the quality of the product is not
the highest. This is okay, as long as it is a temporary state. But increasing production
from the minimum without also increasing quality dooms a small business to a low- or
medium-end market. Since far more competition serves the low or medium market than serves
a higher-end market, growth quickly becomes difficult and of limited potential.
Yet growth is essential to long-term viability. One route to growth is to increase the
number of different products sold. The other route is to sell more of the products you
already produce. A combination of the routes is best of all. But in any of these routes,
growth depends on more production, which depends on more or better customers.
Ask any salesman, and he will tell you a high-quality product is easier to sell than a
medium-quality product in the same price range. He can sell more of them. And that is why
the idea of a trade-off between quantity and quality is a lie. Increase quality, and
quantity sold will increase as a matter of course.
But, you say, doesn't increased quality cost more? Therein you find the rest of the lie
of the trade-off. No, increased quality does not have to cost more. Increased quality is
the result of the following factors, in order of importance:
1. Insistence on quality as a business policy and philosophy. None of the other factors
have a chance without this one in place. Having a Quality Attitude is the first major
principle of quality.
2. Skill of the producers. Skill varies from person to person, but can increase
steadily in any person through training and practice. Training should be ongoing: no one
ever knows everything there is to know about producing their product.
3. Quality control. In a small business, this means every product must be approved
before it is delivered or declared complete. If your crew stuccoes a wall, the quality
approver makes sure every inch is stuccoed and the area is cleaned up before the job is
considered complete.
4. Quality incentives. While pride in one's work is valuable, material reward is also
appreciated. Tie compensation to both quality and quantity, with a greater weight to
quality. Doesn't this increase costs? Not if you are selling more.
5. Reduced waste of both time and material. While this is the subject of an article in
itself, the key to reducing waste is locating the actual reason the waste occurred and
fixing it so it doesn't happen again. Reducing waste provides more time and material for
production at the same cost.
6. Better materials. This is way down at number six because it is not usually
absolutely necessary. When it is, any additional cost, often minimal, will be offset by
increased sales, even if the profit margin per piece is lower.
Most of the above factors do not increase cost at all; none of them decrease profit,
once sales increase; and most of them increase profit. All of these factors can be applied
to just about any small business.
Bottom line: expansion of a small business depends on increases in both quality and
quantity of production, not one or the other.
Don Dewsnap is the author of
Small Business Magic, published by Oak
Wand Publishing. Small Business Magic details the principles of quality necessary to
business success, applying to all aspects of business from production to sales. The
principles of quality are not well known, and almost never applied to their full potential.
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