Business Systems and Processes.

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How does 3% Business Waste Equal 40% Lost Profit?

Most business owners do not face the brutal reality of waste and inefficiency in their business operations. However, experts estimate that the average small business has at least 3% waste; some have much more! (Jay Arthur, “Lean Six Sigma Simplified”). This percentage may seem reasonable at first, but upon further examination, you will see what a profit killer it is.

As a customer, I’m sure you’ve experienced the frustration of things gone wrong. Products have defects. Deliveries arrive late. Parts to assemble are missing. Merchandise is labeled or priced improperly. Counts are inaccurate. Stores and restrooms are unclean. Salespeople lack knowledge. You get the idea. These typical problems occur often and cost business owners dearly in lost profit and lost customers. They are likely happening to YOU!

Waste is Preventable!

Most waste in your business is hard to spot—a little here and a little there, scattered throughout your office and operations. For example, I am always amazed by the number of undetected errors made on customer invoices. Mistakes, rework, delay, and lost time happen every day to everyone in every business. The average organization is like a steak, riddled with fatty waste.

Fatty Business Waste

For a company with a million dollars in sales, 3% waste amounts to $30,000 in cost. This expense, however, is not paid out of revenue dollars, but is paid out of profit dollars! If the company’s net profit before taxes is expected to be 8%, or $80,000 dollars, waste would reduce the profit to $50,000.

Do you realize what I just said? All waste in time and material comes directly off the bottom line. In this example, waste of 3% of sales translates to nearly 40% in lost profit. Yikes!

Stated another way, the company has to sell nearly $400,000 more to replace this $30,000 loss (sales equivalency) in order to achieve the desired profit level. (I don’t want to depress you, but it actually gets worse because there are additional costs in rework and handling of the waste.)

Reduce Your Business Waste to 1%

The closer you get to achieving perfect processes—and a perfect business—the more difficult and expensive it becomes. However, you can bring that 3% waste down to 1% fairly easily. It is not only doable but essential to compete and succeed in today’s business environment.

To error is human, but holy cow, we can all do better at cutting costs. It requires a little knowledge and the right tools. The Box Theory™ Way is designed to squeeze the waste out of your business systems and processes. There is no better way!

Your challenge for today (and you can’t go home until you do it) is to spot one area of waste or inefficiency in your business—an ounce of fat—that you can get rid of tomorrow. Then get after it first thing in the morning!

Related Articles:
Three Kinds of Business Waste Robbing Your Profit
Sales Equivalency—The Surprising Power of Cutting Costs

*****Special Alert: My Retirement is Your Gain*****

To give back to the entrepreneurial community, I HAVE DECIDED TO GIVE AWAY MY VALUABLE SYSTEMS-BUILDING SOFTWARE, ecOURSE, AND OTHER INFORMATION ABSOLUTELY FREE. By filling out the form on this page, you will go directly to a download page. This is not hype. There is no catch. You will receive a software product and a “college equivalent” eCourse on how to develop effective business systems and processes. Customers have been paying for this software and eCourse for fourteen years (see What Cutomers Are Saying).

I will show you how to eliminate business frustrations and make more money by creating remarkable systems and processes that boost customer loyalty, profitability and growth. The application of these strategies has proven to be of great worth for owners of many small and mid-size businesses. Put me to the test!

You will learn the following, and much more:

  • How to become a Systems Thinker and raise your business I.Q. by 80 points—OVERNIGHT.
  • What six elements are found in every great business system.
  • How you can remove waste and inefficiency, and build a results-driven organization.
  • Why good systems and processes are the essential ingredient to start, grow, fix or franchise (replicate) your business.

You have nothing to lose and everything to gain. I will not be trying to sell you because you are getting everything for FREE, much more than I have described here. I won’t be contacting you; however, you can contact me for help with the software or your business at any time. Please browse around my website. If you have any questions, email me, Ron Carroll, at

I hope you enjoy and benefit from this FREE offer. It was a labor of love for me to develop. Becoming a Systems Thinker and using the Box Theory™ methodology will be one of the best decisions you have ever made.

I’ll be cheering you on from my quiet fishing hole in the mountains of Utah.

I want to learn how to create remarkable business systems …

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It's time for me to focus on other things. Many hours and dollars have gone into my software and written materials over the last fourteen years. Now it's time to give back. This is not a gimmick. There is nothing to buy. I give it all to you for free. If you use the software and apply the principles, you can create a remarkable company. See Below. Have fun!

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Michael Gerber

"Organize around business functions, not people. Build systems within each business function. Let systems run the business and people run the systems. People come and go but the systems remain constant."

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W. Edwards Deming

"If you can't describe what you are doing as a process, you don't know what you're doing. . . . 94% of all failure is a result of the system, not people."