Profit Drivers

I’ve often said, focusing on the bottom line in business is like playing tennis with your eye on the scoreboard. To be successful in today’s marketplace you must keep your eye on the underlying factors, the drivers that create profitability.

The following is a list of nine elements that impact the profitability of every business. Each element drives you, or moves you, toward the next critical element. They are also like building blocks, in that you must get the foundational blocks in place in order to build a strong organization that will generate consistent profits.

Paradigm Drives Vision

A paradigm is an established set of rules and beliefs that determine the way we interpret information. In essence, it is our “filter” that allows or restricts us from seeing things differently. Each of us has our own individual paradigms that may keep us from seeing opportunities or threats. The key is to be prepared to change your old paradigms. Always be open to new ideas, they may be the future of your business. When you are open to new paradigms you will have a much clearer view of the real world.

Vision Drives Leadership

As an owner of a business you are the keeper of the vision. Your vision helps you lead your company down the right path. You need managers to accomplish goals, to climb the ladder so to speak. You need leadership to make sure the ladder is leaning against the right wall.

Leadership Drives Internal Quality

True leadership will promote quality standards that are consistent with the vision. A successful leader has a passion for getting the details right and communicates that passion to their entire team.

Internal Quality Drives Team Member Satisfaction

When an organization is committed to providing a quality product or service team satisfaction is increased. Everyone wants to work for a business that achieves excellence on a consistent basis.

Team Member Satisfaction Drives Commitment & Systems

Satisfied team members are more committed to the mission of the business. They are more motivated to develop and maintain the systems necessary to deliver consistent, high quality products and services. They feel like they make a difference.

Commitment and Systems Drives Team Member Productivity

Committed team members who follow systems will be more productive. Systematize the 90% so you can humanize the 10% that requires special attention. People generally work harder when they know what is expected of them and they are committed to the goal.

Team Member Productivity Drives Value

When your team is more productive you can reduce your cost of production and thus increase your profit margins. Or, you can use the added efficiencies to add value which will allow you to raise your price and increase your margin.

Value Drives Customer Satisfaction

When your customers receive extra value they are more than satisfied, they are delighted. VALUE = BENEFITS divided by COST. To increase value you must increase the benefits or decrease the cost.

Customer Satisfaction Drives Customer Loyalty

Satisfied customers will remain loyal. Delighted customers will not only remain loyal they will refer others to you.

Customer Loyalty Drives Profitability and Growth

When customers keep coming back and referring others, you will have developed a money making machine that will be worth a great deal. Also, you will have created a business that will provide the freedom you’ve always wanted.

The first step is to look at your paradigm. How do look at your market? How do look at your business? Are you working ON your business or IN it? Are you open to new ideas and ways of doing business? If not, you may be blinded to the potential of your business. You may have limited vision.

If you really want to grow your business I suggest you spend a lot of time working on your vision. You need to very clear about:

The kind of business you’re in (think very broadly)

Your unique selling proposition (what sets me apart)

What the business will look like when it is finished (visualize it in detail)

When you have the right vision the rest of the pieces will fall into place.

LSL is committed to helping our small business clients succeed. That’s why we created the P3 Group. The P3 Group of accountants and advisors want to be your Peak Performance Partners by providing, compliance, performance and strategic services that will help your business reach its full potential and run smoothly with, or without you. Contact us to schedule a free consultation and business performance assessment.

Profit Drivers – The Keys to Profitability and Growth PDF