You don't need a metal detector to find money
Most businesses have more money than they realize. The problem is they don't know where to find it.
Truth is, money is everywhere.
It can always be found through streamlining and innovation, which begin when you ask big impossible questions. The ones few are willing to ask.
Grow (Smartly) or Die
Like you, your competition is trying to become more profitable.
And while operating a successful business isn't necessarily a zero-sum game, you can bet your lifesavers they're looking to take some of that profitability out of your bank account.
Business never personal.
When a company discovers a leap in profitability, the competition copies what they're doing and looks for ways to do it better, faster, and you guessed it, cheaper.
When your competition figures out a way to do what you do better/faster/cheaper, prices drop. When prices drop, your profit feels the squeeze.
This is why...
Efficiency Comes First
A large percentage of every company's profitability depends on what goes on before and after the sale.
Beefing up your sales team to increase the top line (sales) won't help your bottom line (profit) grow If efficiencies are not in place throughout your entire organization.
Why?
Because whatever new client revenue you generate has corresponding costs. And more often than not, those costs are unaccounted for.
If increasing profitability is the goal, building efficient processes throughout our entire organizations before we chase more sales has to be the priority.
More sales without efficiency leads to more inefficiencies, which leads to less profit.
Efficiency, the Profit Lever
Efficiency is the lever that can increase any business's profits without the need for more sales.
So...
Achieve greater efficiency first.
Then sell more.
Then improve efficiencies even more.
Then sell even more.
Lather, rinse, repeat.
Twice the Results, Half the Effort
How do you get two times the results with half the effort?
We should be asking ourselves this question every day. It forces big thinking.
Serving the same types of great clients who share the same or similar problems AND perfecting our solutions so we can apply them consistently to fix their problems are two routes of efficiencies.
Operational efficiency can be summed up as doing the fewest things you can do repetitively to serve a consistent core customer need.
In short, we should be focused on duplicating our best clients, those with a consistent need, while reducing the variety of things we do that don't contribute to the bottom line.
Eliminate Waste
Get rid of unprofitable products and services.
You don't have to slash and burn. Go slow.
Identify one product or service not making money, but consuming resources, and cut it out.
Once you start this exercise, the impossible suddenly becomes possible and you start finding money everywhere.
Fire Bad Clients
Letting go of clients who suck energy and eat up profit margins allows you to make time for your best clients.
Bad clients, the ones who complain about how much you charge and how you and your staff never do anything right, are costing you money.
Start by dumping the most rotten of these apples. The emotional distraction they cause will disappears almost immediately.
Don't throw good money on top of bad money.
Stop spending the profits you make from your best clients on bad clients.
Fire bad clients and keep those profits where they belong: in your bank account.
Clone Your Best Clients
Clones of your best clients are the definition of efficiency because they allow you to serve few but consistent needs instead of an excessive array of varying needs.
Let's face it. We cater to the people we care most about. We, naturally and automatically, provide better service when we work with people we like and respect.
Think of your best clients. The ones who pay you what you're worth, on time, without question.
Find out where even more of these best-client clones hang out. Then nurture and cultivate them.
In Closing
The most difficult way to increase profits is by attempting to sell more.
Sales without first putting efficiency measures and systems in place is a risky adventure that only leads to bigger expenses and fewer ideal clients.
Firing bad clients, cloning your best ones, and refining your offerings to get the most out of your resources is a surefire way of finding money within your business and increasing profitability.
As always, stay aware, stay educated, but most importantly stay cool.
Talk soon,
Old Man Winter
