… at the Association for Manufacturing Excellence Conference in Boston. If you’re there, let’s connect! But if you’re not, here are just 2 of the Mindset Shifts that will pave your path to profit and change your thinking about what to do next to have a more profitable year-end.
1: The Path to Profit is Driven by Behaviors, NOT Bookkeeping
I speak to hundreds of CEOs each year, and all of them religiously look at “the numbers” at least monthly – they examine their P&L, scrutinize their KPIs, often share that information with their leadership team and employees, and often bemoan the fact that sales are lower than expected and expenses are higher than planned.
So they ask the Sales Team to bear down and do whatever they can to reach the targets. Or they look for ways to cost-cut from the shop floor to the office. If that sounds familiar, then you – and they – may be going in exactly the wrong direction… yet that’s what we’ve all been taught.
Growing sales often boomerangs on the bottom line, because increased discounting results in higher volumes but disastrous margins. Or, chasing bad business ends up being costly (one firm admitted that they spent $14K in rework on a $3K order – that’s definitely a step in the wrong direction!!).
Cutting costs is often done with the Venus de Milo strategy – cutting off the “arms” of your business by reducing training, travel, marketing, maintenance and more means you’re cutting investments in the future of your business, not costs. And eventually, your business will pay for it.
Tonight, I’ll be sharing how to grow sales the right way, and how to “Michelangelo” your expenses so that you end up with “David” – trim and lean, but complete because only the unnecessary costs have been carved away… and not Venus.
Curious how that’s done? Send me an email. We’ll schedule a chat by phone and I’ll fill you in.
2: Pay Yourself First by Pivoting Your P&L
The bad news is that your P&L is backwards. Because with a conventional P&L, profit is just the leftovers of whatever is going on with your sales and expenses… and as we saw above, it’s often not good. Leave your typical P&L for your accountants, and instead, do what I teach clients to do all the time – pivot it, and start with profit. Make expenses the leftovers instead, and you’ll be amazed at how quickly they fall into line.
Think of it this way. When you were a kid, you probably got an allowance, right? If you were a good kid, you put a little bit in your piggy bank, and only then did you spend the rest. Why weren’t we taught to do the same thing in our business? And what’s stopping you from starting that – today?
Here’s the first objection I get from many of the firms I work with – they’re having problems staying current with their suppliers, let alone putting something away in the piggy bank. So there’s a little bit more to succeeding with this strategy than meets the eye, but it IS doable, even if you’re losing money right now, or feeling cash-strapped.
I’ll be stepping the folks in Boston through the path to profit process… if you’d like to know more, then go ahead and send me an email. I’ll be happy to step you through it as well.