Author: FlashPoint | Total views: 55 Comments: 0
Word Count: 956 Date: Thu, 15 Jan 2009 10:10 AM

Zero in on Your Company's Profit Zone and Zero in on Profits

Profitability. It's the reality of keeping a business running and yet remains a mystery on so many levels to business owners. The concept that you have to bring in more money than you spend to make a profit is basic. Getting there is a science.

Think about specific activities in your company that help you make a profit. Of course there are the sales. And there is generating cash flow. And there is the pricing of your products or services. Would it surprise you if I told you there are 9 activities in any company that help you drive profitability?

Think of your company's Profit Zone as a relentless, precise, and intense staff mindset to make and keep money for your company. How strong or weak your Profit Zone is will determine the health of your organization. If you allow your company to underperform in too many of these 9 profit zone activities, your company could go out of business.

The 9 activities that drive and maintain profit in your company consist of:

#1: Revenue generation: It doesn't necessarily follow that just because you drive a lot of revenue to your company that you will make money. However, you have to make money in order to have money to worry about. There are only 3 ways to increase revenue in your company:
1. Increase the number of customers.
2. Increase the number of transactions.
3. Increase the amount of the transaction.

If you don't have a way of attacking each of these drivers of revenue, you won't be able to truly impact your profit as much as you could.

#2: Understand the strategic and tactical focus of the company. It's critical that every single employee's job in your company lines up with the company's strategic plan. And without the focus to execute that strategic plan, profits will remain allusive. So start communicating to your employees how their job influences the plan and how their job influences how the company makes money. This should be your strategic plan.

#3: Gross and Net Profit Margins: Does your staff understand the difference between how your company Makes Money and how your company Keeps Money? Are your financials set up to track revenue groups -- your service or product offerings -- so you can determine where you make the most money? Cost of Goods is defined as Direct Labor, Direct Material and Allocated Overhead. If you aren't tracking your COG against your revenue groups this aspect of your Profit Zone is leaking money.

#5: Cost Structure: Cost of goods helps you calculate how to make money. The cost structure of your company helps you know where you can keep money. What does it cost you to run your business? Once your staff begins to understand what it takes to 'run' a business -- where the money goes that comes in -- their assumptions begin to get into alignment with what you already know. There isn't a lot of profit, the little there is is hard to get and keeping it is even harder.

6: Customer Satisfaction: We all have examples of being the recipient of poor customer service. If there is any employee in your company who can't make the connection to what their job is and how it impacts your company's bottom line, you are fighting an uphill battle. And don't mistake this simple fact: Exceptional Customer Service starts with Exceptional Employees. You need your staff to understand that it's their job to take care of the customer -- it's your job as the leader to take care of your employees.

# 7: Staff Voltage: I'm talking about the energy in the work place that reflects the level of enthusiasm and the intensity of focus as expressed by the people working in that company. You can literally feel it when it's high and you sense it when it's low. When you walk in to your company every morning, what does it feel like? Is there a sense of purpose? Are people interacting or intensely focused on their work? Do you hear laughter? Don't kid yourself that you just need people to do their jobs and you can run a successful company. You need people engaged. You need your staff to care. And you as the leader need to be responsible for Staff Voltage in order to maximize your profit potential.

#8: Product/Service Quality: The Quality of your product or service can leverage your margins. You need to be able to communicate to your customers why your quality is so critical to their business. This creates a value belief in your customers mind linking you to them because of how you can impact your customers' success. So don't stop at just telling your customers that your quality exceeds industry standards or you are a Total Quality Management shop. Go on to tell them why that makes a difference to them and even more so to your customer's customer.

#9: Company Innovation: Are you constantly looking for ways to process orders quicker, create customer reports faster, save money on honing an internal procedure? Company innovation is a global mindset in your company that is consistently improving how you do business. The impact of having your employees, who are the key components of all those processes and procedures energized to continually improve upon the little things, is a huge driver of profitability for any company.

When every staff member knows how their job directly relates to these 9 critical Profit Zone activities, you are that much closer to creating a company that will outperform competitors, excel in customer service and bring more profit to your bottom line.

About the Author

And if you'd like to have Laurie speak to your group and discover other ways to improve your company's bottom line and proactively manage your growth, visit and start finding those pockets of lost profit.