Increasing Profit through Productivity
Your business is doing well, it may even be doing great; but could it be better? This is something we ask ourselves on a daily basis and make sure to ask our clients. Are you where you should be when it comes to Key Performance Indicators? You should be monitoring and measuring your performance in four main areas: Management, Operations, Sales & Marketing, and Finance. If you think you have it covered, you might already be in trouble…you should know, without a doubt, that you have it covered.
Below are the steps you should have in place to achieve business growth, increase your gross margins, and continue to run a successful Organization:
Analyze the Profit and Loss Statement
It is important to review your profit and loss statement to determine the areas that are not meeting your goals. In most cases, you should look at sales numbers, labor and material, gross profit, overhead, expenses and net profit. Once you have isolated the areas that are struggling, develop a schedule and action plan to walk the department(s) responsible through the correct Process. (See below for an example of a P & L Report)
Documenting the Process
Once the area has been identified and the goal is set, gather a team of people to document all the processes within the struggling function. You must then create a process map of all of those steps. Process mapping helps you identify what is done, who is responsible, to what standard should a job be completed, and how successful the process is. (See below for an example of a process map)
Once the process is documented, identify those functions within the process that are critical to the overall success. Then you need to set a goal for each of those areas and list them on a document for the department manager to review weekly. (See below for an example of an Indicator Report)
The Indicator Report measurements should then be passed into the workforce through Scorecarding. Each employee is responsible for measuring their actions within the daily process. This information would then be fed back to the Department Manager to populate the Indicator Report.
Below you will find an example of our Operations Scorecard. We have scorecards for all of the key areas of your business, as well as customizeable scorecards to fit your needs. Feel free to contact us if you would like to take a look at our Management System.
Once the scorecards are completed, they should be fed back into the Indicator Report. The numbers must be compiled and reviewed by the Department Managers (goal versus actual). When a variance is identified from goal, an action plan needs to be developed to fix the variance. The action plan could be tweaking the process or training the personnel. The Indicator Report then gets funneled back to the Profit and Loss Statement.
You can be proactive with the Profit and Loss Statement by monitoring numbers daily and weekly… instead of after the statement is published. You can directly focus and affect those areas that are chipping away at successful strategies. Bottom line, the goal is to increase the net profit.
This process has been proven through research and development. If you are interested in receiving a free copy of our Smart Research paper, “The Effects of Systems Management on Business Performance” which discusses how Organizations succeeded from the 50’s to the present regardless of changing conditions, click here. This report includes information on what worked and what didn’t based on our experience with over 275 Organizations as well as the studies done by three best-selling books of over 60,000 Organizations.
Once you experience the streamlined performance of your Organization and increase your gross margins, you will wonder why you didn’t put this process into place sooner. If the task list and process mapping seem foreign or difficult to find time for, we can help with that…it is second nature to us! Don’t let systems scare you off; they work, they make your job easier, they increase growth, and they make you look like a hero to your clients who LOVE having their jobs completed on time!
Why are you still reading this, when you could be talking to us directly? We aren’t going to try to sell you anything…how could we when we don’t know if you need anything? We want to help you determine what your challenges are, what your goals are, and whether it is worthwhile for you to take action.
What do we get out of it? We get to understand you and your Organization better, as well as what your needs and concerns are; which helps us to provide better service to our clients. To us, that is priceless. So, if you can spare a couple minutes just to talk, please give us a call at 989-791-2475 or shoot us an email (we really appreciate the help!)
If you have less than a minute or two, please comment below. We will always respond and a quick comment might get you the solutions you’ve been looking for.