Right-sizing is about optimising the use of scarce resources within a business to improve its sustainable future performance relative to likely demand. It should only be attempted after a review of performance to plan, within a sector context. Maybe a measure of ‘up-scaling’ or ‘out-sourcing’ is called for? Sometimes, bigger may be better, but not always, depending upon the objectives and Management’s capacity to manage growth and/or acquisitions. In loss-making businesses, down-sizing may be the course to consider, subject to its costs and implications.

The strategic review we advocate need not be expensive, depending upon what KPIs (key performance indicators) or operating budgets have been adopted. Even if there is no firm plan, a review should produce one, so that any right-sizing may be approached with due focus on the key objectives. We use proven methods to help SMEs assess their weight and shape and to point them towards the range of measures that may be needed to make meaningful improvements. As an SME leader, you are responsible for preventing your business from going ‘out of shape’. 

Consider these areas:

Have you set appropriate KPIs and do you take corrective action when performance departs from plan in crucial areas?

Are your limited resources best directed towards achieving desired results? Do you understand your business’s most crucial limiting factors? 

Have you kept pace with significant shifts in your core markets and benchmarked your performance against comparable sector competitors? Are your sales, margins or profit per employee different to the sector norms?

Do you keep on top of ‘under-weight’ and ‘over-weight’ areas as a rolling plan towards progressive right-sizing? Remember that uncorrected imbalances in the use of labour, space or capital will drain profit.