Just because you feel your business is successful doesn't mean that you're not leaking profits like a sieve. Not running your business in a controlled, profitable manner can come back to bite your long term sustainability.
No matter how successful you believe you are, you won't achieve your full business optimization potential until you open up to new business belief systems and stop making these five profit- busting mistakes.
1. Using an elevator pitch rather than integrating a UVP
When you ask most business owners or their staff to articulate clearly and concisely, in one paragraph or less, his or her company’s Unique Value Proposition (UVP), most are unable to do so. Why? Because they have never thought about or offered a specific Unique Value Proposition. Most businesses have no Unique Value Proposition (UVP), only a “me too” rudderless, non-descriptive elevator pitch. There’s nothing unique, nothing distinct, no promise of great value or benefit from the perspective of the prospect or client – just “buy from us” because we want you to. It is not surprising that businesses lacking a UVP leak profits.
The small minorities of business professionals who adopt a UVP fare immeasurably better and have a profound, profitable advantage over those who do not. The UVP is the foundation for the value you choose to bring to the marketplace and will become a benchmark for operations, marketing, selling, customer relations, production, and day to day problem solving.
2. Doing something actually means doing something
There is a huge knowing-doing gap. Doing something actually means doing something! It means addressing the hard and scary work of making something happen. It's much easier and safer to sit around and have meetings and intellectual conversations. Chances are you have built databases, trained for additional certifications, invested in technical infrastructure - and never actually implement anything. Nor, turning that time investment into a profit center.
3. That’s the way we've always done it.
Another huge profit leak is professional (or corporate) “memory”. The underlying emotion here is fear. "This is the way we do things around here, it's the way of our profession" overrides "this is the right and most profitable way to do things." Mistakes are the bane of any business. The best way to avoid mistakes is to continue to do things the way they have always been done. That's fine for the most simplistic functions, however, it vastly limits the most profitable functions. What is created are sacred cows - things that are taken for granted, belief systems, processes, practices, rules you perceive will help you get things done. In truth, all they do is create obstacles to running a fully optimized business.
4. Use the reports you already paid your CPA for.
To improve performance, you need to have baselines and real numbers. The right numbers allow you to know where you are, what went well and what needs to be worked on. Without using numbers, you can easily get lost and off course, reducing both your effectiveness and efficiency. Profitable businesses are run by “the numbers” with operating budgets, KPI’s, individual profit centers by clients, employees, products, services and more. Chances are you already have this roadmap to locating profit leaks in your hand and paid for it, too! It’s the Profit and Loss Statements sent from your CPA (I bet sitting somewhere on your desk right now). Are you losing profits in two ways? By not effectively using a powerful tool and one that you paid for already? That counts as a double profit leak.
5. The tip of the iceberg-underestimating the value of the staff.
Just because someone lacks a particular pay scale in your company doesn't mean that their ideas or input should be ignored. The Iceberg of Ignorance suggests that your lower staff members have full knowledge and awareness of all problems and profit leaks.
What is the “The Iceberg of Ignorance”? Sidney Yoshida’s study concluded that “only 4% of an organization’s front line problems are known by top management, 9% are known by middle management, 74% by supervisors and 100% by employees”.
Makes sense, since your front liners are the ones plugging all the holes caused by senior management. (Did I say that out loud? LOL)
Looking to find profit leaks, plug up gaps and create a happy, functional staff?
Remember my simple rule- Employee Frustrations = Profit leaks x Plugs = Plus over Normal Cash Flow
Pull up a chair, get humble, start asking questions and build a space where employees will be able to feel safe speaking openly and honestly about what they are seeing. You will find veins of gold!
P.S. Want to just talk "business owner to business owner"? Call me (Bill Baylis) directly at 516-544-8118