In times of turmoil, in economic blues, and in great recessions, the one thing that people seem to struggle to hang on to is their PROFIT. All businesses want to gain profit, but for some reason most don’t have a profit plan beyond “increase revenues, decrease costs, and watch the P&L after the fact!” When you started your business you created a business plan, right? You do a strategic plan every year, right? Well then… where’s your Profit Plan?
All you have to do is think P-R-O-F-I+T, and that’s it! This simple 5-step plan is the profit plan that you NEED if you want to reach your profit goals.
Allow me to explain…
The first step in the profit plan is the P for Profit, and it is all about making sure that you’ve got really Penetrating and Powerful insights. There are a couple of chapters at the beginning of my latest #1 Best Seller Profit In Plain Sight: The Proven Leadership Path to Profit Passion and Growth where I show you how in a very, very easy non-accounting way, you can figure out which of your customers are profitable and which ones aren’t because too often most businesses will focus on revenue because revenue is easy to measure.
Well, guess what? Often your biggest revenue customers are your least profitable because you bend over backwards for them, service the heck out of them, and they grind you on price. Your biggest customers are not always your best!
The R is about realizing rapid results with what I call the 5R’s. Take a quick look at this video link to get you started. I’ll also feature each of the 5Rs in more detail in my October blog posts, in honor of Manufacturing Month.
The O is what I call Obliterating Operational Sludge. Sludge is all the costs that should never be there in the first place, but are a natural by-product of doing business, just like clean oil eventually gets dirty in your car, just because you drive it. Every now and then, you need an oil change. A busy customer service department that keeps fixing the same issues over and over is a sure sign of sludge that is costing you a bundle and there are easy ways to get that sludge out of your system.
The F is something we all love to think about doing but we all hate to do. That is Fearlessly Pricing for Value. I know that even when I go to give a customer a quote sometimes I cringe. I think… oh are they going to think this is too expensive. I do this for a living, and I still, as a small business owner feel that sense of oh my gosh am I overpricing?? But what it always comes down to is, creating value. The way to fearlessly price for value is to understand what your customers value about doing business with you and what they don’t even notice! They’ll always pay for value… but only if you communicate it. That’s why I make my value proposition something they can’t say no to, with a promise of a 100X ROI, and a “whatever it takes” guarantee. The ROI comforts their logical, practical left brain. And the guarantee provides the peace of mind that their emotional right brain loves.
The I is the infinite return on investment of innovation. Innovation is a big, big topic, so let me just plant this seed in your head. Inventions are often “cool”, may require a lot of R&D, and often sit on the shelf. Innovation is the little things that simply make your customers’ lives easier, are based on your understanding of their real problems and needs, and fly off the shelves as a result. Invention is high risk. Innovation can be low risk. Pick up a copy of Profit in Plain Sight, The Proven Leadership Path to Profit, Passion and Growth, and you’ll find 21 ways to innovate, even in mature markets, that you’ve probably never thought of.
The T is the toughest thing to do and that is take action. I often find that business owners at any level have really good intentions and they get busy back in their email again or they get busy just doing all the sludge in their business. They never actually carve out those 90 minutes once a week to just get really proactive and say what that are going to do about building a more profitable company, so that that they can fund all the growth they want to. Things such as, hire the extra resources, invest in more training and more services, or whatever it is fits your business.
And there you have it, the five-part P.R.O.F.I+T Plan to get YOUR business reaching it’s biggest profit goals!