If your company is not achieving its profit potential, you should focus your attention on areas that can make a big difference.
The following steps can help you do that:
-Objectively look at your untapped profit opportunities. Do this by analyzing sales and marketing, staffing, organizational structure, operations and financial management.
Ask yourself the following questions: Do we maximize sales from our complete product line to existing customers? Are our employees focused on generating profits and do they have a plan to follow in order do to so? Is management encouraged to receive ideas from throughout the company?
Don't do the analysis alone. With only one set of eyes, seeing all the opportunities is impossible. Involve your management team to help identify initiatives. Once you are done with your analysis, compare your company's performance with one of your competitors that is running efficiently.
-Expand responsibility for company profits. Communicating and assigning responsibility are key ingredients in your profit quest. If you go to the lowest-level employee in your company and say, "Our firm is having a great year. Where do you think the money is going?" the individual will probably respond that it's going into the owners' pockets.
People at higher levels of the firm may also share this view of corporate profits. Communicate to your managers and other employees so they understand how profits are reinvested to make the company more competitive, how important their roles are in making the business more profitable, and how they benefit from these increased profits.
People have to know what's in it for them.
-Eliminate departmentalism. A car dealer noticed sales were strong but overall profits were weak. On paper, individual departments performed well. When asked how things were going, each manager replied that they were having the best year in a long time.
The managers, however, were focused on their own departments and not on improving the corporation's overall performance. For example, the used car manager had his inventory serviced at a garage down the street that charged lower hourly service rates than the dealership.
This type of behavior is a cancer that will destroy your business. Stellar performance by certain departments is meaningless if the whole company is not on strong financial footing.
Continually communicate to all your employees that individual and departmental performance is encouraged and rewarded, but improving overall corporate profits is the No. 1 priority.
For reprint and licensing requests for this article, CLICK HERE.
Stories You May Also Be Interested In
- Small Biz Column
- Entrepreneur's Notebook---Balancing Operations With Broad View Key to Growth
- Balancing Operations With Broad View Key to Growth
- Entrepreneur's Notebook - Making Workers Aware of Profit Aids the Bottom Line
- Voice Mail
- Good Consultants Can Boost Efficiency of Businesses
- Women's Council & Awards 2018: Transforming Organizations