Ambitious entrepreneurs would never START a business without a Business Plan. Experienced executives would never lead their business without a Strategic Plan. Yet leaders at all levels try to run their business without a Profit Plan. Is it any wonder that 84% of executives confess they don’t have the profit they need to fund the growth they want?
A Profit and Loss Statement is NOT a Profit Plan. It’s no better than looking at an after-the-fact Key Performance Indicator (KPI) after the fact in lieu of having a Strategic Plan and saying “oh darn, let’s try to do better”.
- A P&L is reactive and focused on numbers.
- A Profit Plan is proactive and focused on the daily behaviors that create or destroy profitability.
A Profit Plan starts with setting a forward-looking goal rather than looking backwards to last year and adding the customary single- or double-digit increase. Here’s an example of what you can achieve when you look forward to what is possible:
You asked us all to plot our “Return on People” on the chart. Unfortunately at that stage this indicator was actually negative $9,955 per employee. While our management team knew we were in a loss position, the impact of seeing our “profit per employee” “at the bottom of the class” was very impactful. We immediately set a new goal and implemented the Profit Plan you outlined. By year end, I am pleased to confirm that we achieved $26,671 profit per employee – the highest profitability levels in the organization’s history.
CFO, Major Building Products Manufacturer
A solid Profit Plan should deliver these results: sell more of the right products and services more easily to more of your ideal customers, at higher prices reflecting value (you might be surprised at what they REALLY value – have you taken the time to find out?), and at lower costs to you by eliminating costs that shouldn’t even BE in your business (betcha don’t know what they are, or they’d already be gone).
Over the past several years, I’ve taught my clients a simple acronym and then worked with them to implement it and see Take-it-to-the-Bank results – often within 30 days:
P owerful, Penetrating, Provocative Insights to see what’s possible… and set the bar higher.
R apid Results with the 5Rs of Proactive Customer Profitability Management: Retain, Regain, Reactivate, Ramp Up, and Restore to Breakeven or Better (if margins are under pressure, competition is increasing, you know some customers are costing you more than they’re worth, you know you’re leaving money on the table, or you have a list of lost customers and a database of inactive customers – you need this!).
O bliterate Operational Sludge to eliminate the costs that shouldn’t even be in your business.
F earlessly Price for Value… and know where and how to safely test price increases.
I gnite the Infinite ROI of Innovation for sustainable competitive advantage.
T ake action to Trigger Take-it-To-The-Bank Transformation.
Too often, leaders get caught in the Revenue Trap – increasing top line growth at increasingly slim margins to increasingly less-ideal customers. And being stuck in the Revenue Trap doesn’t deliver bottom line results. So they enter the abyss of conventional cost-cutting and shave ever-increasing amounts off of the travel, training, marketing budgets, and capital expenditures by saying 7 of the most limiting words in business – “we don’t have the budget for that”. Unfortunately, what they’re trimming are not costs they are investments in the future of the business. And while those cuts rarely deliver significant bottom line impact, the significance of NOT investing in those areas is substantial. Which would you rather have? More profit, or more revenue? Or a P.R.O.F.I+T Plan that delivers both?
Would you like to explore how to embed a P.R.O.F.I+T Plan into your business and see results in less time per week than you’re spending on email every day? Book 30 minutes in my ecalendar and let’s talk.
#1 Bestselling Author, International Speaker, and Accelerator Anne C. Graham is on a mission to help business leaders and their teams double their profit per employee – or more – in less than one year, in less time per week than they’re spending on email per day. Her book Profit in Plain Sight includes the 5-step proactive P.R.O.F.I+T Plan to do it. Connect with Anne on LinkedIn.