In good economic times or bad, it's often difficult for companies to grow their way to bigger profits. So there's much to be gained by learning how to be more profitable without getting bigger. We help clients achieve profit enhancement -- regardless of their size and no matter what business they're in.
Consider a Profit Audit
It's amazing how many companies have marketing plans,and perhaps business plans that they can show to bankers. But very few have taken the extra step of developing profit plans that can explain to the bankers what their real profit potential is down the road.
Important: Traditional profit projections, based on a previous quarter's or the previous year's performance, are very limiting. When a company or a salesperson reaches those budgeted goals or exceeds them slightly, there's an inclination to sit back and do nothing more.
Much better: A profit plan that incorporates a continuous incentive to improve. Think of it as reaching for the stars -- you may never get there, but you'll get a lot farther than if you failed to try.
To come up with new profit ideas for clients, we examine each of the five areas of the business -- sales and marketing, personnel, financial matters, operations, and issues of organization. It is not unusual to find hidden profit potential in all of these areas. But we find most companies are strong in some areas and weak in others.
Our job is to build up the weak areas so that instead of dragging down profits, they can contribute and even become profit centers. Here are just a few ideas:
- People Potential. You may think an obvious way businesses can save money and improve profits is to lay off employees. We find, however, that layoffs are often ineffective and usually aren't necessary.
With most companies, the problem is not too many people, but too much unnecessary work. One of our favorite rules of thumb: There's nothing more unprofitable than doing unnecessary work more efficiently.
- Pricing Opportunities. In today's low-inflation economy, many companies are complaining about their inability to boost profits by raising prices. But there are often ways to do this when a company knows which products or services its customers value most
Another idea: Have you performed in-depth customer research? In our experience, surveys result in adding or dropping products or services, as well as re-pricing them.
"Barbara Walters" Questions
One effective technique for discovering hidden profit opportunities is to answer a series of "Barbara Walters" questions. They are tough to dodge and force you to be honest. For example:
- What does our company do best? If no one knows, there's an obvious problem. Working toward a good answer, though, usually results in strategies that boost clients' core operations and thus increase profits.
- What products or services should we eliminate? Everyone in management probably has an answer, but no one has asked for it. When the tough answers come out, unprofitable activities can be eliminated and profits can soar.
- Exactly who are our customers? Money is often wasted on efforts to reach the wrong people. Analyzing customers in terms of profitability is a powerful way to cut marketing waste and again, increase profits.
Are you maximizing your company' financial performance? If not, try the ideas listed here. These are only a few of many we can assist you with. Please feel free to contact our firm to help revive or jump start your bottom line.
How will your retirement accounts be split? (It is critical to discuss a "Qualified Domestic Relations Order," which establishes a legal right to a portion of a retirement plan and ensures that your ex-spouse is responsible for paying the income taxes on any distributions that he or she receives. Without a QDRO, you could wind up paying the tax bill.) 
