Does your company have enough fat?

I understand the need to cut wastage from businesses and trimming the fat has been a tool within business for 1000s of years, but is cutting always the best method to use?

Let’s take a manufacturing business, for example, the costs associated with that are massive. and with the modernisation of the machinery, less and fewer people are needed to run the business.  I looked at a business once which had previously occupied a massive factory, employing 100s of staff to produce its products but had niched down like the experts suggested, invested in new machines and reduced staff to create a single product for which they were great at doing.

Now with less than 10 staff, mainly in the office, the business could run efficiently, but their 1 machine is now working at capacity, and they cannot take on new customers, the cost of the additional machine is too much, and they don’t have the staff or other machinery to now increase capacity again.  They have cut too much fat and now they are stuck for a way forward.

When babies are born, they look cute and cuddly, most of them have baby fat where they can look chubby but soon once they start to run around burns off, do you know it is very normal for children to gain a bit of fat just before a growth spurt? same with other animals, they will gain weight because the function of growth needs that stored potential energy. And businesses are no different.

If you cut the fat off your business, are you limiting your growth? Are you cutting back too much? and what happens to your potential growth? So, when you see fat in your organisation, how do you deal with it?

With Mobius Capital, our aim for businesses that join our group is to identify the fat in the business, but then recognise it as the potential it is, can we train the additional staff to take on a new client, or service offering, is there something we can do to grow the business, the group, or to start a new business in another area with them.

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