Findings from a thorough cleaning.

The vacuum cleaner is pretty amazing. It’s a cool machine for being able to pick up stuff, but it is not extraordinary in that respect. It’s amazing for what it shows us about ourselves. You pull out the filter and you see dog hair, cat hair, maybe some Legos, dust, sand, gum wrappers, fingernails, paper clips and those little plastic price tag holders that you need to snap off your new clothes; all that stuff. And that’s what a thorough cleaning does, it shows us about our what we don’t need any more.

That is what we have been experiencing the last couple years, a thorough cleaning. We watched as our wallets were cleaned out every week by the gas and oil companies with $4 fuel. As a guy with a full sized 4WD sports-ute, that wasn’t a very fun lesson, but we paid a heck of a lot more attention to the needless driving in our personal lives. This proved itself only too true when the Cash For Clunkers Program saw a spike in sales primarily for the more fuel-efficient foreign cars over domestics. We, also, paid more attention to maximizing freight as this became an expense that could turn the difference between profitability and losing money. But now gas is cheaper again and we are able to take the lessons and reset our expectations as we move forward.

Next we were cleaned out of our retirement and savings. The vacuum cleaner came in and sucked 40% of the average investors’ value out, thank you very much. As long as our time horizon is out a fair distance we were only looking at a paper loss and still owned just as many shares as before. But if your time horizon is shorter this was a catastrophic event. The market has seen a fantastic run-up in the last 8 months and perhaps what we see here is that we need to be more mindful of diversification within our portfolios and balance our time horizon risk tolerance.

Along the way, as time went on, we reduced our manufacturing costs way below where we thought we ever could or would. We broke out the vacuum cleaners again. We had a thorough cleaning in our plants. It was power, it was hours & OT, it became people. We reduced travel, advertising, inventory, interest and redundant product lines. We found ways to survive. We found efficiencies that we didn’t know existed 2 years ago. And that’s the thing about a thorough cleaning, we found all kind of things about ourselves. We’ve learned to use what we have in new ways. We’ve chosen to prioritize orders and personnel. We’ve found our less Lean brethren have hit the exits. And we have found more and better ways to survive become more efficient and being diligent about things we took for granted, like making sure that customer is going to pay.

It would do us well to check our dirty filter, the waste that we have cleaned from the expense portions of our income statements. Reflect on the waste you have rid your plant of over the last couple of years. Reflect now, and continue to reflect at regular intervals on these tactical decision and ensure they mesh with your overall goals. Consider the success of your cleaning and develop a plan to maintain your Income Statement and Balance Sheets with an eye on the waste in all markets, good and bad.

Direct your company’s path by ensuring you fully understand your costing. Don’t think for a moment that your competition knows theirs better than you know yours, because they probably don’t. Be bold and confident, but measured. Good luck.