Welcome back to the Mid Market Insider!
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Let’s jump in…
Last week we spoke about some of the most important criteria you need to consider when buying a business.
We broke it down into 3 factors:
1. Size
2. Geography
3. Industry
This week I want to be more tactical in my message…
I want to dive into the importance of process improvement.
Now if you don’t think making improvements in your business is important, then I suggest you don’t read any further.
If you do?
Then you are in the right place.
The first part of trying to improve your business?
Understand what the goal is.
As it relates to process improvement, I like to focus on eliminating waste.
Now eliminating waste can offer a lot of benefits but the focus is more efficient resource usage.
The resource might be:
- Staff’s time
- Raw materials
- Your own time
And so on.
By eliminating waste, organizations can optimize resource utilization and increase profitability.
And I can’t say this enough but as a business owner, you always have to be trying to improve.
Adopting a child-like curiosity with a thirst for knowledge will keep you ahead of the competition in life and business.
I know that a lot of my audience doesn’t watch my YouTube channel but I will include the link here just in case you want a bit more context and depth than I can provide on this newsletter.
7 Hidden Inefficiencies That Could Be Costing You In Business - How Process Improvement Works
Now, let's explore the foundation of process improvement by understanding the different types of waste within your business.
Many folks break it down into 7 types:
1. Overproduction
2. Defects
3. Motion
4. Over-processing
5. Waiting
6. Overhandling
7. Inventory
1. Overproduction
Overproduction—making more than customers or processes need—is often triggered by unbalanced workflows or mismatched production speeds.
When one part of the process produces faster than others can consume, it creates unnecessary inventory that ties up resources and space.
This mismatch between production and demand is one of the most significant sources of waste in any operation. Many of the other types of waste can result in overproduction.
2. Defects
Defects ripple far beyond the flawed product itself, impacting time, resources, and customer satisfaction.
They are merely symptoms of deeper process issues, triggering a chain reaction of waste—from wasted materials and rework time to damaged customer relationships.
What starts as a single quality issue can cascade into widespread operational inefficiencies.
3. Motion
Searching through multiple drawers for a single item perfectly illustrates waste in motion.
These small, repeated actions—opening drawers, shifting items, checking shelves—might seem trivial, but they accumulate into significant time loss.
While each instance of unnecessary movement may only cost seconds, these inefficiencies compound over time to create major productivity drains.
It's often these seemingly minor inefficiencies that have the largest impact on overall productivity.
4. Over-Processing
Over-processing often hides behind what we think is good customer service.
Take a web designer who adds a blog feature that wasn't requested—while it might seem like adding value, it could be wasting resources on unwanted features.
What appears intuitive ("more features = better service") can lead to unnecessary work and revisions.
The solution?
Always clarify exact customer requirements before starting work.
This ensures you're delivering what's needed, not what you assume is helpful.
5. Waiting
Waiting is a hidden drain on business efficiency that often masquerades as time management.
When employees pace their work to meet distant deadlines rather than completing tasks promptly, they create artificial delays in the workflow.
This behavior, known as Parkinson's Law, means work expands to fill whatever time is allocated—not because of laziness, but because humans naturally adapt their pace to given timeframes.
The result?
Projects that could be completed in days stretch into weeks, creating unnecessary lag time that impacts the entire business pipeline and ultimately reduces productivity.
6. Overhandling
Overhandling demonstrates how the pursuit of process efficiency can create its own inefficiencies.
While companies implement multiple checkpoints and handoffs to ensure quality, these "improvements" often result in slower delivery and more errors.
Just as each baton pass in a relay introduces risk, every additional touchpoint creates new opportunities for mistakes—turning well-intentioned efficiency measures into bureaucratic bottlenecks.
7. Inventory
Sometimes planned waiting is better than overproduction.
Consider a two-step manufacturing process: Step A takes 1 minute while Step B takes 1.5 minutes.
If you run Step A continuously, you'll create a growing pile of half-finished products waiting for Step B to catch up.
Instead, it's more efficient to have Step A work for one minute, then wait 30 seconds, staying in sync with Step B.
While this introduces deliberate "waiting time," it prevents the bigger problem of excess inventory and keeps your production flow balanced. The next step would be to try to balance the processing time of Steps A and B.
Improving operations requires both humility and flexibility.
While frameworks for identifying waste are valuable, they're just starting points—every business has unique challenges that won't fit textbook solutions.
The key is to stay open-minded: what worked for a competitor or what you've done in the past might not be the best solution for your current situation.
Success comes from combining proven principles with a deep understanding of your specific business.
Now I know that was a lot to take in but I barely scratched the surface.
Keep an eye out on my YouTube channel as I’m planning to release part 2 of the Process Improvement series!
🧑🎓 The Lessons:
1. Cost-Saving Starts with Identifying Process Inefficiencies
These process inefficiencies often represent your biggest cost-saving opportunities—and they can be fixed without major capital investment.
2. Your Customers Define Value
Good intentions can waste money.
Adding extra features to products, implementing excessive-quality checks, or maintaining excess inventory might feel like good business practices, but if customers aren't asking for them, they're draining your resources.
Talk to your customers about what they actually value before making operational improvements. Your customer decides what they will pay for. Listen to them!
3. Small Changes, Big Impact
You don't need complex solutions to see real results.
Simple fixes—like organizing workspace layouts, streamlining approval processes, or adjusting production schedules to match demand—can significantly improve your bottom line.
Start with one area where you see obvious waste (like excess inventory or repeated quality issues) and build from there.
📅 Next Week:
Next week: The Good, the Bad, and the Future of Private Equity.
We'll dissect what's working, what's broken, and where the industry is heading.
Stay tuned
Keep building,
Nick
P.S.
If you want to hear more from ‘The Most Boring Guy In Private Equity’, follow me on LinkedIn and YouTube. I dive into the world of private equity, share some tips and tricks for small business owners, and most importantly, share my industry knowledge.
Make sure to follow me so you don’t miss out!
LinkedIn: Nick McLean
If you want to discuss your business goals in greater detail book your free discovery call:
https://calendly.com/nickmclean/discovery-call
P.P.S
I just launched my new podcast Ambition with Nick!
The Ambition podcast features conversations with business leaders who have embraced risk, shattered ceilings and leaned into the tension between building both a business and a life they are proud of.
Make sure to check it out here:
Apple: https://podcasts.apple.com/us/podcast/ambition/id1775963497?ls=1
Spotify: https://open.spotify.com/show/0JvsO1vTlNGnF9RpB53mXZ
