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How to Improve Your Profits

A mind is a lot like a parachute: It only works if it's open. If you really want to increase profitability and cash flow in your business, you must welcome change. You must become a learning company that thirsts for knowledge that helps you learn how to do things better and faster while improving your quality and productivity.

I've often said, "The only constant is change." But change is difficult for many entrepreneurs because they have strong opinions, and that makes them resistant to change. But what you think about is what you become. So if you really want to become more profitable and improve operations in your company, you first have to shift your focus away from the following limiting thoughts:

  • "We are a unique, one-of-a-kind business with no competition."
  • "If I can't fix the problems, how can anyone from the outside help?"
  • "We're working on improving things--the plan is in my head."
  • "My competitors are no better off than I am; no one's making any money these days."
  • "If I avoid fixing the problems, they'll eventually go away by themselves."
  • "We've survived tough times before, and we'll just ride this one out, too."
  • "All I need are more sales to make more profits."
  • "I don't have time to improve, I'm too busy."
  • "If I get that one big order (or customer), everything will be OK."
  • "If I solve that one big problem, everything will be fine."

Do any of these statements sound familiar to you? I bet one or two of them do. You've got to eliminate these restricting thoughts, and then you'll be ready to take the next step to improve your company's people, processes and profitability.

Do you ever wonder how a company can start out with just one entrepreneur who has an idea, a passion and a vision and then, 10 or 20 years later, have thousands of employees and billions in sales? What did these companies do to become so successful? Were their owners smarter than you? Did they work harder than you? Did they have better equipment or people? No. But they do use better tools to drive operations (the people and the processes). Operations represent 60 to 80 percent of all your costs but they're the least understood by U.S. businesses.

For decades, the Japanese have focused on operations that have driven innovation and a culture of never-ending improvements. In the right hands, operations can be a competitive weapon. But, you may ask yourself, how can your small company--with just a handful of employees and limited resources--turn operations into a powerful weapon to beat the competition and learn to grow and thrive?

Believe me, it can be done. The first rule of business in each of the five companies I founded was, "If we can't produce a profit, we will not survive." Profitability became one of the most important issues I focused on each day. So begin by asking yourself "Is that employee (activity, service, process, product) profitable, or does it drain profitability?"

Remember, it's not what you make, it's what you keep that's critical to your success. So instead of growing the top line, spend time focusing on the people and processes that get you there. Say, for instance, you have 20 employees and 50 to 100 processes that each cost the company money. How well are these processes and people managed and measured? Do they add value to your business? When different employees do the same process or task, do they produce different levels of quality, output and productivity? Are some employees better than others?

The bottom line is, if you're suffering from tight cash flow, exhausted lines of credit and stagnant top-line growth, then you have weak operations. But you don't have to put up with the status quo--there are steps you can take to quickly change the course of your business and your future.

The first step to rapid improvement is to start by questioning your employees. Trust me, they know exactly where the costly stumbling blocks and bottlenecks are hidden.

Not sure how to get started? The employee questionnaire that follows is a valuable tool to gauge your company's existing situation. I've heard back from many business owners who've reported that after distributing this questionnaire to their employees, they discovered some real gems of information that enabled improvements that saved their company tens of thousands every year.

One word of advice: For the best results, make sure your employees understand these questionnaires are anonymous. Many employees are afraid of retaliation for their honest answer, and you should assure them that open and honest feedback is critical and that their answers will be completely confidential.

Employee Questionnaire

1. If you were in charge of the company, what are the first three things you would try to accomplish?

2. What three things would most improve your job?

3. What three things do you most dislike about your job?

Please check YES or NO for each question below:
 

People/Culture YES NO

4. Are employees in the company comfortable talking to their managers or supervisors about work-related problems?

 

 

5. Are managers well qualified to be in their positions?

 

 

6. Are owners/managers open and honest with employees?

 

 

7. Does the company provide you with continual training in areas that will make you a better employee?

 

 

8. Are your responsibilities generally well planned and organized?

 

 

9. Is poor performance tolerated in the company?

 

 

 

 

Leadership YES NO

10. Do you get cooperation from others when needed?

 

 

11. Does "teamwork" describe the company's organization?

 

 

12. Overall, is the company's treatment of people very fair?

 

 

13. Does ownership completely understand your work problems?

 

 

14. Does management/ownership listen to your ideas?

 

 

15. Does management/ownership accept your ideas?

 

 

16. Does the company move quickly to solve problems?

 

 

17. Do you feel updated as to what's happening to the company, either good or bad?

 

 

18. Do you feel you understand where the company is headed over the next 12 months in order to remain competitive in your industry?

 

 

19. As an employee, do you feel you can trust your direct supervisor/manager?

 

 

 

Performance YES NO

20. Do you understand completely what's expected in your job?

 

 

21. Are you regularly told when you do good work?

 

 

22. Do you get the help you need to do a good job?

 

 

23. Are the customers of the company pleased with the level of quality and service your company provides?

 

 

24. Does the company place a high priority on servicing its customers and developing customer loyalty?

 

 

 

General YES NO

25. Does everyone in this company share the goal of improving the company's profits?

 

 

26. Does each department in this company have measurable standards designed to increase profitability?

 

 

27. Do good performers receive better pay increases than poor performers?

 

 

28. Are your interests and ambitions being challenged?

 

 

29. Everything considered, is the company changing for the better?

 

 

Speaker, author, profitability expert and entrepreneur John Mautner is the president and founder of APT/Cycle-of-Success Institute. www.advancedprofit.net.

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How You Can Inspire the Best From Your Employees

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