Analyse profitability and efficiency to move forward, writes Lisa Mandic, principal consultant at River Empowerment, management consultants.
The No 8 wire way of thinking can spark the idea for a business and set it on its way, but once a business reaches a certain size, it needs some considered strategies to get it to the next level.
Our business's turnover has been growing well for the past
few years but our profits are not following suit. What sorts of things should we be looking at?
When starting a business, it is natural to take any kind of work and get it done any way possible. Be strategic about what work is worth your time and effort.
Firstly look at product (service or job) profitability. Ensure all your product offerings are earning their keep. Fix any that are not or phase them out of your range.
The same goes for client profitability. Who is costly to service? Fix the situation or move on.
For example, a sign-writing company knew they made little profit on most single sign jobs, so they developed a relationship with a small sign-writing business and referred one-off single sign requests to them. This increased profitability and freed up valuable time to focus on securing more large and repeat-need customers.
Finally, look at efficiency. A lot of inefficiency comes from trying to meet unpredictable and varied customer needs - micro-managing is essential, workflows constantly change and additional costs are everywhere.
Clear profitable sales parameters enable you to focus on efficient delivery.
Secure the necessary resources, develop economical systems and effectively delegateing appropriate responsibility to your team.
We have been taking on new staff every year. How do we integrate them effectively into our stable team?
Many growing businesses have close-knit teams as people have to pull together to get a business up and running. Sometimes it can be challenging for new staff, who don't share this history, to fit in.
To help new employees, write down the important things about your business that are readily understood but not usually discussed. For example, take note of your business values and how your business is different from its competitors.
Ensure you recruit people who fit the values and culture of your business. This is critical because while skills can be learned, personal values and work ethics do not tend to change.
Lastly, make time to help new staff fit in. Explain your business and their role in it, let them spend time with different people to learn more about the business and how they will affect others, assign them a buddy to help with the social, less formal elements of work and make sure they get answers to their questions.
In helping new employees succeed in their role, you are helping them gain the confidence that comes from belonging to a well-performing team.
There are improvements we could be making on products and services and with new competition, we can't be complacent. What should our priorities be?
Your customer's needs should always be your priority.
Ensure you keep dialogue going with your customers about their challenges and how effectively your products and services help them meet those challenges.
The more you understand your customer's business, the more you can help them. Many new product and service ideas have originated from customer requests or problems.
A close relationship with your customers also makes it harder for competitors to push in.
But don't forget any improvements need to have a a win-win outcome where the changes are profitable developments for you too.