I was meeting with a business owner the other day, and we had a conversation we have had several times before: How can they make more money?
Does this sound like you?
They are investing in more people, they are opening more locations, and they have more sales. Isn’t that pretty sweet?
AND, their bottom line isn’t growing.
I know you might think what that business owner thought: Prices are going up, labor rates are higher, new competition is coming into the market, yet you have to invest to grow. At this point in the economy, there are lots of people with fingers crossed behind their backs.
This owner has everyone in their organization focused on growing sales.
And, who is focused on growing the bottom line? Is anyone being asked to grow the gross profit percentage by some small amount on each bid? Do they know what the gross profit percentage is? Does each person understand how he/she contributes to the bottom line? What if everyone in your organization understood how their job contributes to profits? What if they knew what the bottom line was-how little it is?
More and more companies have dashboards measuring the cost of sales activities, cost of goods or services sold, contributions to margins. They share the bottom line results and even some of the profits. They are incenting people to make the company and themselves more money which seems pretty logical. If you aren’t sure where to start, ask your peers how they do it and get in to the action.
You can’t cut your way to growth, but you can’t single handedly grow your way to profitability, either. Can you get your team to set up the game for success?
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