A Goal-Oriented Philosophy
Profit success is defined by whether or not our annual profit
goals are met. I think one of the goals of an entrepreneurial
business is to beat the big
competitors
in the profit margin game.
This is the goal that creates a
valuable
company, and this
should
increase exit options for you. Your CPA should be
able to provide you with industry benchmarks, and if they
cant, youve got the wrong
CPA. The whole profit game is one with which you need to be very
careful. One way to reach this profit goal in the short term is by
raising your prices, but if you do so, you must do so with caution.
As a result, you may see an increasing customer attrition resulting
in long
term
profit
erosion
. Remember, profit dollars are much more
spendable than profit margins! If you travel this route, you better
ask yourself or your leadership team: What
increasing value are we providing our customers in return for
asking them to pay us more money? If you
cant easily answer that question, I think you
are setting yourselves up for failure in the long run. The American
consumer is just too smart to accept higher prices without
corresponding higher value.
Our goal as a company remains focused on adding more satisfied
customers every month. We feel we need to
attract
more customers
with our great prices, and then retain them with
superior
customer
service. If we provide greater value than our competitors,
hopefully we will earn the right to deserve a higher price, and
thus, higher profits.
Every business owner should be thinking about businesses all
around them that command higher prices, resulting in higher
profits. Try and bring this way of thinking back to your own
businesses. For example, ask: How does Lexus
get such a high price (and the resulting high profits)? And why
cant Ford do the same thing? If
you cant answer that question, talk to people.
Walk into a Lexus
dealership
and talk to the sales people. Talk to
Lexus
owners
on the street. They will gladly tell you, and tell you
with
pride
. Then get over to that conference center with your
leadership team and ask yourselves how you can be the Lexus of your
industry.
Remember, customers make buying decisions based on their
perception of value and great experiences, not just by looking at
price. If you increase the value or give them a better experience
than your competitors, your customers will gladly pay more. And you
will gladly enjoy the profit increase. Most importantly, you will
have earned it.
Thinking
Leaders
Generate Profits!
Everyone in an organization has an impact on company profits,
not just the Chief Financial Officer or the Vice President of
Sales. After all, a profit center
is not something you can really talk about in isolation. Everyone
in every organization should be thinking of ways to help contribute
to profits. If not, they are a waste of money. For example, I
believe even our receptionist
contributes
to profits. As a
business-to- business call center, we never see customers face to
face. Our
receptionist
is the face that greets our 5,000 customers
every time they call for service. Every new idea that we implement
should contribute to profits by virtue of making the customer more
satisfied.
Only the thinking leaders, no matter what their actual position,
generate profits. In our company, we try to achieve this by holding
a managers meeting every Monday with our eight
members
of the leaders hp
teams
(President, VP
Finance, VP operations, a/r manager, Officeville and The Service
Source sales and customer service managers). Every week, we all
submit and discuss the top five things we need to get done that
week. We also report to the team how many and which ones we
completed from previous weeks.
But most importantly, every member of the leadership team must
submit their great idea of the
week. At the end of the meeting, we take a vote on
the best great idea, and then we track the results. Therefore, our
culture is centered on the idea of thinking leaders; everyone is
continually thinking of great ideas to reduce costs, improve
customer service, and grow sales, all of which ultimately
contribute to greater profits.