So, you’re running a great business, or maybe you’re running a struggling business, either way you have big plans for the future. You have a Business Plan… whether its on the back of a napkin or full of charts and projections. You have a Strategic Plan… you know where you’re going and you’ve set your priorities for how you’re going to get there.
But will you stay in business long enough to realize your dreams at your current burn rate?
Most businesses fail because they don’t understand how to create and implement a Profit Plan that turns the results of all those long hours and hard work into take-it-to-the-bank results that keep you in business and fund future growth. And no, your conventional P&L Statement is NOT a Profit Plan! It’s a statement of great intentions… but the as soon as revenue projections come in below budget or costs come in higher than expected, profit is reduced to being just the leftovers! That’s not the way to survive, let alone thrive, and losing sleep over the numbers is NOT where the fun is in your business! It’s time to make expenses the leftovers in your business, without the usual draconian cost-cutting measures that strangle the spending that’s essential for growth.
Here’s some of the conventional thinking that’s holding you back:
1. Let’s increase revenues! Great! There’s only one problem. 40% of the companies who increase revenues in any given year actually DECREASE their profits. They’re growing… in the wrong direction! Are you?
One firm found a missing million dollars in revenue just by asking a customer an unexpected question that had nothing to do with sales – are you connecting with your customers in a high-touch way at an executive level – even in a high-tech world?
2. Let’s cut costs! We’ve all been there – and we cut training, travel, marketing, people – all of the things that are actually investments in the future of our business. There are only two problems with that. You’ll slow your growth rate with slash-and-burn cost cutting and the sum total will NEVER be enough to make a substantial difference on the bottom line. So let’s not go there either. Instead, you want to cut the costs that shouldn’t even be there.
One company found that 50% of their monthly costs were completely unnecessary and could be jettisoned without even missing them. 50%!!! Why? When times were good, they’d loaded up on a lot of little recurring expenses that added up to a LOT of money. Most companies never even examine 20% of their costs – what’s hiding on YOUR expense lines?
3. Let’s raise more financing! GREAT! But guess what? The weaker your income statement and balance sheet are (i.e. profit), the more that equity is going to cost you. No profit, and you’ll either have to compensate investors richly for risk OR have an uphill battle to find financing at all. So that’s not a sustainable strategy.
You need a Profit Plan that pays your business first and creates a strong bottom line. One company who has been using that strategy for years had financiers lined up around the block with attractive rates for an acquisition that doubled the size of the business… because they had a great bottom line, and a strong profit story to tell.
The Bottom Line – Literally:
You’re an entrepreneur. You’re an innovator. You think outside the box. It’s time to wrap your head around some unconventional approaches to building profitability into your business, not as a 911 effort when you’re gasping for survival, but as a way of doing business, so that you and your business get paid first, and you never get stuck settling for leftovers. The good news is that embedding profitability as a way of doing business has very little to do with grinding through spreadsheets and crunching numbers, and everything to do with small shifts in everyday behaviours across the organization. It’s where ALL the fun is in your business. At ACETECH’s 2017 Whistler Summit I’ll share a dozen seismic shifts for profit, and how to embed them in your business. Let’s go make good things happen!
Anne C. Graham is the #1 best-selling author of Profit In Plain Sight, a renowned international speaker and consultant, and the creator of The P.R.O.F.I+T Roadmap and ProfitU. Access free profit and growth resources at AnneCGraham.com. Connect on LinkedIn. Follow me on Twitter. Email Questions.