Well as they say, “Out with the old and in with the new”, and so it goes for saying goodbye to 2016 and hello to 2017. As business owners and managers, we are tasked each and every day to not only challenge and improve ourselves as leaders, but to also challenge the status quo to ensure our businesses succeed as well.
So where do we start; how do we get on the road to success so we can accomplish all of our challenging tasks? In order to be successful, we need to have a clear picture of where we have come from, and perhaps even more importantly, where we need to go. How do we attain the successes we seek both personally as well as meeting the challenges management puts in front of us each and every day. These challenges are further complicated by the never ending demands of corporate management to:
- Do more with less
- Continually reduce costs, and
- Make a significant contribution to improving corporate profits at the same time; and that my friends, is no easy task!
But before we all put our heads in the oven because these demands of everyday business are so overwhelming, let’s take a methodical look at these 3 key challenges we all face. It is time to clearly outline a path for success in 2017 and beyond, to assure our personal, as well as our businesses goals succeed in spite of these critical demands.
- Doing More With Less:
What business owner or manager for that matter, hasn’t been confronted with the need to reduce staff or has had a “hold” put on new hires due to diminishing corporate profits? So when we are faced with this challenge, what do we do; how do we react to this daunting challenge? The answer to this question will speak volumes about who we are as a business owner or manager.
Sometimes our initial reaction is to make it known that certain functions that had been previously performed within the company or department will no longer be performed due to the reduced staffing. Well, if that’s the case, how important were those functions in the first place? What successful business owners and managers should be doing is taking a pro-active approach to this particular challenge, well before the demand is made.
That pro-active response is to continually review and analyze all of the functions being performed within the business or within a particular department. The goal here is to make sure that all of the functions are needed and are being performed in the most efficient manner possible, with the least “qualified” person handling those functions. Do you have the proper processes and procedures in place to ensure performance at maximum efficiency; do you have the most efficient people or teams performing each of those functions? If you have not answered yes to these questions, and have not performed this review within the most recent 6 months, your business or department may not be as efficient as you might think. And the need to reduce staff will definitely have an additional negative effect on your business.
And while we are on the subject of processes and procedures, has your company or department completely documented all of the critical processes and procedures it performs? If a key employee is no longer around to perform those critical tasks and is the only person who truly knows how to handle those tasks, your business is at risk and will suffer greatly from the loss of that key employee’s expertise. We can assure you that many companies fail miserably at documenting critical processes, and cross training for that matter, and therefore remain at tremendous risk. Don’t let your company fall victim to this easily corrected shortfall by making sure you immediately address it.
- Continually Reduce Costs:
Oftentimes business owners and managers accept the challenge of reducing costs when it is forced upon them by financial concerns or a demand from corporate management. But again many companies rarely act in a pro-active manner to reduce costs as a regular part of their business processes. What business owner or manager does not want to see their business grow and prosper by achieving financial success? It’s human nature to want bigger and better things for our companies each and every year. But having said that, how many companies are truly prepared to ensure their businesses financial success by continually monitoring all costs, regardless how small and insignificant they may seem.
To start you need a plan of action that outlines exactly what cost centers your business or department is responsible for. What control do you have over the expenses that are being charged to your department, if any? And if not, that’s the first problem you need to address. How will you gather the necessary information for each of these expense categories so you can perform a comprehensive analysis to see if the costs are the lowest possible costs for the services or products you are responsible for? Here are some examples of expense reduction areas to review immediately:
- When was the last time you had your telecommunications invoices audited? Are you paying for land lines you no longer use; are you being charged for services you never authorized?
- Do you have your energy invoices audited by an independent third party who has the expertise to find over-billings that may have been going on for years?
- When was the last time you had your insurance policies benchmarked to see if your coverages are exactly what they should be and that the premiums are the lowest for the coverages required?
- Do you continually benchmark your transportation contracts to make sure the costs are constantly competitive? The freight carriers increase their rates at least once a year, so if you haven’t looked into these costs in the past year or two, what are you waiting for?
And these are just a few suggestions that can have a major impact on corporate profits. These four areas alone can contribute tens of thousands and maybe even hundreds of thousands of dollars to your company’s bottom line. And the best part, you do not have to sell a single product to gain this bottom line improvement. We like to call it a “no brainer!”
- Improve Corporate Profits:
All too often businesses operate as individual silos with each department or division only assuming responsibility for the profitability of their own little fiefdoms. These departments or divisions should also be concentrating, and be held accountable for, achieving financial success for the entire corporation as a whole. Management also sometimes fails to foster corporate wide cooperation within the silo operating concept to achieve a much larger positive financial outcome goal than each department or division can achieve on their own. Don’t mis-understand me there is nothing wrong with each department, or division for that matter, having their own individual financial goals and budgets. However, they should not be allowed to focus solely on those goals at the expense of achieving much greater financial success for the company.
Sometimes departments will come up with thoughts and ideas that will clearly improve customer service, however these concepts may end up “costing a little more” to achieve. You’ll note we put the words “costing a little more” in quotes and that’s because very often the hard dollars of the additional costs can be accounted for, but businesses have no way of measuring the financial success these programs can have on their businesses through increased sales and customer loyalty.
The point of all this is to challenge each department to work together to ensure that there is a cohesive understanding of the impact these individual decisions have on the overall financial success of the company. While we’re on the subject of “improving customer service” (again in quotes), what does that really mean? One thing we can tell you for sure is that “improving customer service” means different things to different companies, for example;
When you call your utility company and you get a recording that sounds something like this “thank you for calling ABC Company your business is very important to us so please listen carefully to the following menu options as they have been changed to serve you better.” Are they kidding? Do you call that improving customer service? We think not, but they obviously do!
Or finding out you’re overpaying for your monthly cable service, solely because you have been a “loyal customer” for years. While that same cable company offers new subscribers two year contracts at half the price you have been paying. So much for customer loyalty. Sorry cable company, (and others for that matter), you got this all wrong! The net result, when your contract is up you switch to another cable company, (hopefully there is another one in your area). That business model tells the customer they mean nothing to the company offering that level of “customer service”.
The reason we bring customer service up under the title of “improving corporate profits” is precisely because many companies do not focus enough on their customers’ wants and needs as they should. And, by ignoring the customer’s needs and wants, they are clearly jeopardizing corporate profits. Nothing will enhance corporate profits more than on-going customer loyalty year after year, after year. You have to earn it, but when every employee and every department within your company works together to achieve true customer loyalty, the company will clearly have succeeded in improving its corporate profits.
Let us know what your plans are for business success is 2017, we’d love to hear from you!