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7 Steps to Profit Growth
By Paul Fileman

If your business is not growing as you would wish, it could be time to get back to basics. The discipline of running a business is relatively straightforward. The problem is that most business owners are so wrapped up in winning the next order that they forget the basics. Sometimes, this failure proves disastrous as it leads to one or more of the following:

  • No sales
  • Sales - but not profitable orders
  • No deliveries
  • No cash collection
  • Constant panic
  • And on and on and on .....

Here are our top 7 areas to think about for getting control of your business. As you read on down, you might start to recognise things from your own business. Why not keep a note of which statement (a, b or c) is closest to your business.:

1) Finances

Which kind of business are you?

  1. Accounts and numbers are best left to the accountant and dealt with in one big bang a couple of months after year-end.
     
  2. I keep an eye on the bank statements and make sure the books are brought up to date at intervals throughout the year.
     
  3. My business books are kept up to date with everything being reconciled and balanced at least monthly. We have a set of accounting information updated monthly, together with a cash flow forecast. These form the basis for a review of business performance and are used to ensure that we are adhering to our plan as well as to trigger corrective action planning and as a communication tool to help us work more effectively with the bank an other key stakeholders.

Staying in control of the finances should not be time consuming and, in the long term will save time, frustration and panic.

2) Sales

Which philosophy do you subscribe to:

  1. Sales is a numbers game - as long as there is loads of activity something is bound to sell. We will just keep working harder until the results start to appear - we hope. We chase anything which appears as an opportunity - you have to be in it to win it!
     
  2. Sales planning and customer records exist. We know we should have more structure in place, but we seem to get by - most months.
     
  3. We operate a structured sales planning and sales management process with new opportunities reviewed and the proposition carefully tailored to those we decide to go after. Anything which does not meet our criteria is politely declined. Our market and our customers have a clear understanding of our core strengths and respect the fact that we are careful to chase work that we know we can deliver to a high standard and at a reasonable profit with a competitive price.

3) Marketing

Which form of marketing do you use:

  1. Mostly reactive with any expenditure regarded purely as a cost. Adverts and on-line activities are not coordinated and are inconsistent in timing, appearance and messages. You have never profiled your target customers and the audience you need to be communicating with. You have no idea what works and what does not as nothing is measured. Your web-site has not changed since it was first published and you have no idea what traffic levels your web-site is generating.
     
  2. You find it easy to work on one element of your marketing mix, regardless of the outcomes. You spend too much time on things which you are not entirely convinced are working for you. Your marketing metrics are a little confused and you do not have a clear idea of the value for money.
     
  3. You work to a well written, concise, marketing plan which defines your marketing audience and marketing objectives. You have clear measures in place and regard your marketing expenditure as an investment which gives a clear return in terms of sales leads and opportunities which convert into profitable business. Your marketing activities are consistent across all media.

4) Delivery

When you take an order and start the process of delivering your products or services to your customer, which kind of process kicks in:

  1. You add the order to a list and somehow it makes it to completion. You are never quite sure where any order is in the system but three or four telephone calls can usually get to the bottom of any delivery problems. You rely heavily on supplier good-will to get help you to meet customer deadlines, although most orders are a few days late. Cash flow forecasting is very difficult because you never really understand what stage each customer order has reached until it is invoiced. Quality issues are dealt with reasonably promptly when a customer complains.
     
  2. Your team work to a system. When you can find the right person, you can easily see how things are going. You sometimes ask customers how they feel about your quality and you are quick to fix things when they go wrong.
     
  3. You have a clear set of processes which make sure that any order goes through without fuss and complication. Your operations reviews deal with exceptions and process improvement in a constructive way. You have a reporting system which makes responding to customer enquiries quick and easy. Suppliers find you easy to deal with because your order processing and delivery promises are consistent with a realistic schedule. Cash flow forecasting is easy as you have information readily available. You always work pro-actively with customers to make sure that every order exceeds expectations.

5) Review

Which review process do you use:

  1. Every time something goes wrong, you get a few people together for a chat. You tell them what you think went wrong and when you feel better, the meeting ends although nothing really gets accomplished in these meetings. If you need to work out what is happening in the business, it takes a lot of running around and asking questions to get to the bottom of where things are and the reasons behind the issues you are facing.
     
  2. You have occasional reviews and your team work reasonably well to prevent problems recurring. You have a reasonable feel for how the business is running but there is limited structure in the review process. People have been heard to comment that your review meetings seem to last a long time.
     
  3. You have a structured review process using regular meetings run to clear agendas. People know what to expect and the meetings are productive, rarely consuming large amounts of time. Your reporting systems mean that you always know how the business is running and what issues need your attention.

6) Strategic Plan

Which of these best describes your business:

  1. You do not need a Strategic Plan - the business gets by and you are happy to keep working 100 hours every week with no change in sight.
     
  2. You have some business goals and a Strategic Plan but the last review was several years ago. You would like to start making some changes to the business but do not have the time to devote to this task - and you would struggle to know where to start.
     
  3. You have a clear and succinct Strategic Plan which describes how the business will develop and grow in the medium term. The plan is regularly reviewed and you know that you are on track to meet your personal business goals.

7) Suppliers

Do you:

  1. Place orders with suppliers having no regard for the outstanding balances at any time, only paying invoices when chased and threatened with action. You are constantly taking calls from irate suppliers and sometimes have to juggle your cash position to keep vital suppliers sweet enough to ensure continued supplies.
     
  2. Keep an eye on critical suppliers and make sure they are paid promptly with everyone else having to take a chance at the end of the month.
     
  3. Keep accurate records of purchases made, including large amounts in your cashflow forecast and ensure that all suppliers are paid on or before the due date whilst ensuring that the cash position of your business is under control at all times.

Keeping supplier payments under control saves time in the medium and long term - and it ensures that people will go the extra mile when you need something in a hurry.

Added: 20th January 2011

Paul Fileman is a business results improvement professional, marketer & mentor. He works with businesses to improve their profitability and performance. Find out more about Paul's company Results Zone.

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