Master: Sequel Hotels & Resorts
Key Indicator: Priced 30% lower than its rivals
If there were ever a time to run as lean as possible, this is it. But, as Barry Cross, an operations management and technology professor at the Queen's School of Business, points out, becoming lean is about more than just cutting costs—it needs to pervade every aspect of your business: "Running lean eliminates waste and complexity in your system, and that tends to really generate other opportunities."
Anne Larcade, president and COO of Sequel Lifestyle Hotels & Resorts, has applied that lesson since launching her hotel-management firm in 2005. She decided, for instance, to have no office space at all by having all her managers and back-office staff work from home. That yielded not only $50,000 to $100,000 per year in savings for her Huntsville, Ont.-based firm, she says, but better work-life balance. The latter is a focal point for Sequel, which Larcade says helps keep turnover to just 17%, vs. an industry average of almost 30%.
"Most of our people think like entrepreneurs," she says. "They're constantly bringing ideas to me—ways we can do business for less cost, or processes we can improve to save time or labour." Sequel teaches all 250 staff to read financial statements so they better grasp cost management. "The key to being lean is to allow your employees to come forward with ideas," says Larcade. "You're the enabler, the maestro."
Sequel has embraced technology to run leaner. For instance, Larcade uses the Web-based application Easy Time Logs to estimate more accurately how much time her staff will spend on each service for a given client. This accuracy permits her to leave out the cushion usually built in to quotes prepared using rough estimates. Larcade can drop her price, undercutting rivals, yet know she'll still make a profit.
Larcade also finds lower-cost ways to deliver in areas where her clients don't require gold-plated service. Whereas competitors have call centres, Sequel doesn't— saving up to $150,000 as a result. Instead, it encourages customers to make their own bookings online using TravelCLICK, or directly e-mail the employee they're dealing with, who the firm promises will respond in near real time.
Lean overheads allow Sequel to charge 30% lower property-management fees than its competitors do, says Larcade. This advantage helped the firm finish a tough 2008 with revenue of $9 million, up 8% over 2007. And Sequel is on track for 15% growth in the first quarter of 2009.
Scott Morris, a partner at Results.com, a Calgary-based business growth consultancy, says lean companies are well positioned now. At a time when banks are scrutinizing balance sheets like never before, firms with cash on hand, low overheads and little debt are the most likely to be entrusted with bank loans. Morris says these companies have an opportunity to acquire new products, new business lines and even competitors at cut-rate prices.