THE ISSUE WITH THE TISSUE (PART III): Business Operations & Management

My latest trip to the wholesaler was filled with anticipation. I had set up all of my systems back at the office and this time, when I entered the information into my spreadsheet, I was confident that I would be able to extend my tissue purchases past fourteen days.

After the first week, I was excited that the newly installed tissue holders were not only secured by lock and key but also were aesthetically pleasing to the eyes. As both new rolls sat inside of the fixtures, I was prepared to replenish each roll, one by one. Afterwards, I would update my spreadsheet….date, how many rolls were replaced and which restroom (1, 2 or 3) was being serviced. This process persisted for weeks. After analyzing my newly collected data, I noticed that I had not ordered any tissue in more than thirty days. My new adjustments were working! Thirty days extended to sixty. Sixty days extended to ninety. Ninety days extended to one-hundred and twenty days! That’s right, you heard it, I went from purchasing tissue roughly every fourteen days to four months in between purchases!

My latest results were invigorating! When quantifying my resolution to “the issue with the tissue.” Each pack of tissue was purchased at a price of, let’s say, $30. Having to make a tissue purchase every two weeks, required that I go shopping twice per month. In sum, I was paying roughly $60 per month for tissue. Undoubtedly this is a “small leak” for sure. However, after calculating this cost over a twelve-month period, the firm was spending roughly $720 per year on toilet tissue! What’s even more daunting is that adding additional costs like my time, gas and credit card interest to the equation, this expense starts inching closer to the thousands. Multiply that by the next forty years, and the firm will have spent between $28,800 and $40,000 on rear-end maintenance!

After providing consistent updates on my tissue project and its progress, the Managing Shareholder was more than pleased with my detail and the savings that came with it. In essence, I had reduced this expense from roughly $720 per year to $180 per year. Multiply by forty years, and I would have saved the firm $21,600 ($28,800 - $7,200). Remember, that’s just one “small leak.” Imagine the impacts of having several of these hiding below the surface

of your organization. In fact, I would dare to say that something as small as an “issue with the tissue” could not only cut into your profits but possibly bankrupt your business in the future. Why? Because it’s no secret to Entrepreneurs; there are peaks and valleys during your journey. When rainy days come, you’ll need some money in your coffers to endure the “inclement weather.” For those who are “cashflow rich” and have poor habits, an economic downturn will force them to burn through their cash reserves (if they have any) at an alarming rate! All of the “small leaks” have now created a puddle in the vessel’s bowels and even greater effort is required to prevent the “business ship” from sinking. This is the point where Entrepreneurs examine costs and attempt to implement methods to reduce them. Unfortunately, at this point, the “ship” is taking on excess water, and it’s quite challenging to maintain momentum while sealing a leak. Trust me, you do not want to experience this! One last entry into my story about the issue with the tissue…

As I experienced the satisfaction that accompanied my cost savings for the firm, I continued my routine. In my mind, one hundred and twenty days between tissue purchases was more than sufficient. However, one late Friday afternoon, I decided to refill all rolls so that I would not have to do so on the following Monday. Our office was merely one hour from closing, and I was proactively preparing for the upcoming week. However, while placing one roll into the fixture in bathroom number two, I remembered that I forgot to look into why the toilet continued running well after being used. In fact, it would run consistently and was driving up the buildings water usage/costs. This would undoubtedly be my next project; however, I needed to take a good look so that I could engage my plumbing vendor with the proper information. Roughly five minutes later, after re-entering the restroom to gauge the toilet’s condition, I noticed the new roll that I had just placed into the restroom was completely empty. My mind’s wheels began to turn. How could an entire roll evaporate in five minutes? Additionally, given we were at the end of the week, many of our building’s occupants left early for their weekend festivities. This just didn’t add up. Perplexed, I approached the paralegal who I had spoken about in earlier posts. She was virtually the only individual still in the building besides me and the receptionist. As I inquired on whether she had used the restroom recently, she immediately met me with defense. She was a very sweet person, and I was genuinely surprised at her response when I simply asked, “Did you just use restroom number two.” She never answered and met me with fierce opposition. In order to remain calm, I de-escalated the situation and realized that I had found a source of the Firm’s “issue with the tissue.” As I sat back at my desk to reflect, I came to the realization that because of all of the adjustments that I made along the way, it was nearly impossible for someone to walk out of our office with a roll of tissue. Surprisingly, I would never guess that someone would be so desperate that they would cycle the entire roll with their hand, conceal it, and place it in their purse. This was an added layer of complexity, one that I could not ignore.

While entering the wholesaler for the first time in four months to purchase tissue, something in me believed that neutralizing this in-office threat was critical. I thought to myself, “what else has she been stealing?” Then my compassion seeped in, “maybe she’s struggling to make ends meet and her desperation is forcing her to do this.” As I continued to walk the aisles, I finally approached the tissue. This go-around: I elected to select a less expensive brand. It was not pillow soft or padded…maybe one-ply….one step above notebook paper (lol). A couple of weeks later, my paralegal colleague who had gotten persnickety with me previously, expressed her disdain for the new tissue choice. I listened to her concerns, but unfortunately, the veil had been removed from my eyes. After making that minor brand adjustment, one hundred and twenty days extended to one hundred and eighty days! Now we would be purchasing tissue twice per year! Also, given the nature of our newly purchased rolls, they were about $5 less expensive than the previous choice. Now that we were only making this purchase twice per year, and our new rolls were less expensive than the previous, our savings, compared to our starting point, was more than $600 per year! I was certain that we could repurpose those funds and use them to help grow the business and increase profitability.

What I have been painstakingly attempting to illustrate is that Benjamin Franklin’s “small leak” proverb is extremely true and relevant as you embark on your business journey. In the grand scheme of life, no, tissue usage is not that big of a deal. However, through the corporate lens, it takes on new form. Truth is, if you are a successful company, $720 is not that much money. Assuming this was the only “small leak,” maybe it wouldn’t raise any concerns. However, what I found is that after fixing one leak, you usually realize that there are many more below the surface. What if you had thirty small leaks that cost you $720 per year? Now you’re looking at more than $21,000 worth of “small” expenses! As you continue to grow your business and strengthen your processes, pay close attention to your day-to-day operations and the costs that accompany them. Whether you are making your product or service available to consumers (B2C), businesses (B2B) or the government (B2G), cost management is key. As a general rule in business, costs are passed on to the consumer. If you are actively monitoring and managing your costs, you can surely offer your customers better rates than your competitors because your cost of doing business is lower. Offering your service at a lower price does not mean that you are less profitable than someone who charges more. Profitability follows only when revenues are greater than expenses.

So, in closing, monitor your expenses intentionally. Use data to objectively assess your “leaks” and once you’ve been able to define the problem, consistently measure, analyze, improve and control your outcomes. As the captain of your ship, while you chart new waters with your team, remember that no issue is too small. If one day you find yourself faced with a “small leak,” similar to my “issue with the tissue,” don’t be afraid to make the required adjustments. The distance between you and greater profitability is as thin as a single sheet of one-ply toilet tissue.

ABOUT THE AUTHOR

Jason Johnson, MBA, MAcc is an Entrepreneur, Educator and State Contracting Consultant who has decades of business experience. He has worked as an Analyst and Consultant for one of Georgia’s largest government agencies, and during his tenure, provided education, guidance, and support to more than five hundred business owners. He’s also the Author of Clearing the Hurdles: Winning Strategies for Entrepreneurs Interested in Government Contracting. Jason’s efforts have contributed to nearly $100 Million of contracting awards.