This is the time of year when businesses are deep in planning mode – year-end reviews are being done, budgets are being set, and strategic goals are being reviewed for the current year and set for the new one.
There is one main focus in all of these processes, and that is PROFIT.
Established business leaders know that everything hinges on profit. Leaders of new types of businesses – those geared toward humanitarian efforts – know that if there is no profit, there is no humanitarian impact.
If you are an entrepreneur, PROFIT may not be your main focus – perhaps you are more cause-driven or freedom-driven; yet if there is no profit, there is no ability to benefit the cause or fund the freedom.
When it comes to profit, the bottom line is…the bottom line counts. And it counts in a major way toward fulfilling the vision of the company.
Here’s a quick guideline to ensure that you, as a business leader, drive PROFIT in your business:
Profit doesn’t happen by chance. It happens as a result of planning – planning for each month, each quarter, each year…and ideally for the long-term of five years or more. While you may have to adjust plans as you go, having those plans ensures you reach goals in a more targeted fashion than if you did not have a plan.
Conrad Hilton had a plan to purchase a bank as an investment. Instead, when that deal fell through, he bought his first hotel. The rest, of course, is history. While the plan was adjusted, the fact that he had a plan in the first place led him to the area of the first hotel purchase.
It makes no sense to have a plan if you simply look at it once a year. Instead, make the plan measurable, and keep it in front of you at all times. Review it daily, weekly, monthly, and quarterly to ensure your business is on track. It’s much easier to adjust a course that is off by one degree than to adjust it after it has reached a 180 degree mark.
Outstanding Products and Services
Quality has always counted, but never so much as today. Why? Two words: social media. Provide outstanding products and services, and social media can be your best ally. Fail to do so, and it can be your worst enemy. Quality is one of your best marketing tools, as a satisfied customer will most certainly tell others. In a day of relationship marketing, this is gold.
In an era of “more-more-more” and “faster-faster-faster,” there is a quietly profitable model based on one word: FOCUS. Here’s a fact: you can often create more profit from one product or service (or one line of products and services) than you can from hundreds of them. The key is focus. Focus on being known for something clearly identifiable; focus on being the best at one thing; focus on being the most efficient and cost-effective in a certain field. A narrow focus creates a profitable model.
Henry Ford is a great example of this. He designed the assembly line to do one thing (create vehicles), in one model, and one color. It worked exponentially well. Though the models and colors have expanded beyond the original, the company still does one thing: it creates vehicles.
One of the most important members of your team is an innovator. This is someone who thinks outside the box and sees beyond the headlights in business. Given the pace of change in business, an innovator is critical to profit. Serving current needs is not enough. To be truly profitable, you must be prepared to serve needs that do not yet exist – and in fact, to create those needs. Some of the most profitable businesses of our day have been built by innovators.
Budgets are essential. Tracking accounts payable and receivable are necessary. Forecasting is important. Investments are critical. But none of these matter if they are not tied to the targeted goals. You could, for example, make a great deal on new software for your business; but if that software doesn’t contribute to your targeted goals, no matter how great the deal, you have lost money. Granted, there are cost centers and profit centers in a business, but do all you can to ensure that the cost centers are contained while the profit centers are expanded. In fact, with some thought, there are ways to turn some cost centers into profit centers in your business. The key is to focus on your goals, and focus on profit. The solutions will come as you focus on those key areas.
As you plan your business this year, are you planning for PROFIT?