As the saying goes, “Turnover is vanity, Profit is sanity” vente cialis en ligne. And yet, during our ten years of helping businesses across sectors, sizes and industries, we have encountered many examples of “lost profit”.
The result of losing track of your profit drivers can be frustration, long hours and lack of direction and focus. When we have reviewed the barriers to profit we have encountered over the years, we have categorised them into four headings – Processes, Performance, People and Procurement.
Procurement
The obvious place to start when trying to release profit – any cost saving impacts directly on the bottom line. From challenging existing suppliers and playing them against an alternative, through to using purchasing groups, auction options or other plans, the results can be phenomenal in terms of putting cash in the back pocket. As a start point, use your net margin figure to calculate the increase in turnover you’d need to achieve the same impact on profit.
Performance
As the chairman of Nestle once said, “everybody, every day, should be asking what they can do to improve their work”, and this philosophy is an excellent one to adopt. As a basis for any improvement, it is important that businesses measure themselves with a set of relevant indicators, so that areas for improvement can be identified. In some respects, this may entail a full balanced scorecard, in others just a few relevant measures that can indicate the health of a business at a glance. Using this data as proper management information is integral to improvement.
People
Tied into the performance aspect of improving a business, profits can also be released by the staff working within the business. From clarifying expectations and managing performance, through to regular communications and a clear organisational culture, excellent performance is delivered by those who understand what is expected of them, and feel empowered to make decisions, make mistakes and make a difference. Supporting this, investing time and effort in building skills will enhance capabilities, capacity and contribution from key staff members.
Processes
When the words “cost reduction” are often mentioned, the instant reaction is to think of reducing headcount and announcing redundancies. However, there is a lot of efficiency and profit to be gained by challenging the business processes in an organisation, so as to tackle waste, and add value to customers at the same time. Often called “lean thinking”, there is a toolbox of techniques to tackle process improvement. As with any change, to make new systems become sustainable, then it is vital for the people involved to be a part of the change process.
Improving one or more of these areas will have a positive impact on your business – the start point is knowing where you are now, and then forging a “profit improvement plan” moving forward.
To receive our 4 P’s presentation, then contact Ian Pilkington via email, ian@i2iconsultants.co.uk.
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