Why buy a mirror? So you can have a good long hard look at yourself because the problem and solution starts with you!
Let's start with our definition of business:
The purpose of a business is to solve a customer's problems – profitably
Most companies solve peoples’ problems very well however don't do it at a profit (or with enough profit!)
So what are you in business for? To make a profit.
Is your business not as profitable as it should be? Is your cash drying up and banks making it difficult to fund the business? Don't blame the industry, economic times, competitors. It's your fault. It's also up to you to fix it; so what are you doing about it?
To fix the profitability of a business, you don't work on the business you have to work on the people. A business is a collection of systems, processes and procedures designed by management and implemented by staff to solve a customers’ problem profitably. So if you want to fix problems in a business you have to work on the people who are in control of the system i.e. the company leaders.
Are you responsible for profits? Of course you are, we are all responsible for profits in the business we own or work for. If you are a leader then this article is aimed at you! Why? Because if the business is not profitable you are part of the cause and your are also part of the solution. The following is a list of the more common mistakes leaders are making that prevent a business from being as profitable as it should be:
- Making excuses e.g. We’re ok, we’re doing better than our competitors, we are in a tough industry
- Accepting mediocrity
- Not asking for help
- Not making the tough decisions
- Lack of profit & cash focus
- Lack of aggressiveness, discipline & accountability regarding sales
- Too much focus on teamwork in lieu of individual performance
- Business not coming first
- Delegating then abdicating
- No plan
- Lack of leadership
Are any of these statements familiar to you?
It must be remembered that a business not being as profitable as it could must not be taken as a personal attack on your capability. It just means you are not doing enough to improve your profitability and therein lies the opportunity.
In most situations it is a case of leaders not having the knowledge and / or tools to grow the profits. If you had a legal problem you would ask a lawyer. If you had a tax problem you would ask an accountant. Who would you go to for a business problem?
The good news is that 90% of problems in business are internal which means they are under your control and can be fixed, provided you take action.
So what can you do about it? Here are a few actions leaders can take:
- Increase awareness of profitability, cash flow, customers’ needs, business strengths and weaknesses, market opportunities and threats, business’ performance gaps
- Roll the sleeves up and get to the root cause of why you are not making acceptable profits
- Develop a profitability improvement plan which includes strategies on how to rectify performance gaps i.e. identify & eliminate leakage, install critical control points, remove business waste and improve productivity
- Provide leadership i.e. focus efforts on profit & cash; the more effort, the greater the profit, end denial, stop making excuses, tough love, make hard decisions, delegate don't abdicate, ensure staff do what they say when they say (accountability)
- Mange your cash i.e. run business by the numbers-weekly, build the bank balance
- If you need assistance get it!
If you would like to improve your profitability and would like some assistance, speak to us. We can help you with solutions to help grow your profits, this is not a weakness it is leadership.
Contact us on 03 9797 0590 and arrange a free opportunity assessment to show you where the profit growth opportunities are in your business, and how that opportunity can be realized.