Improve Profits With a Three Point Plan

There are three primary ways to increase profits. Increasing revenue is the first and best way to improve profitability. Bring more work in the door, and you have the best opportunity to improve operating profits. This may not always be easy, of course, but paying close attention to customer needs and assuring that core services always meet those needs are two major keys to success.

Second, selling, general, and administrative expenses (SG&A) must grow less quickly than revenue. Though this is obvious as a goal, the means are not always clear or easy. Strong ties between SG&A people (staff) and operations people (line) are the keys to achieving this outcome. Shared goals and frequent communications in all formats are the most important aspects of this linkage. The over-arching theme is service, and, although this will be interpreted differently by people with different backgrounds and responsibilities, it works well as a unifying goal and will become a dominant cultural theme. It is one that is oriented to both internal and, of course, external customers.

Third, reduce business dependence on less profitable areas as they shift. Recognize such change and be prepared to adapt. Some changes are more predictable than others, but change itself is inevitable. Therefore, managers and employees need to be flexible instead of adhering to old rules in the new game. This is easier if we emphasize higher-level definitions of what we do, what is meaningful work, and what constitutes success. We have found it to be far less productive to emphasize details, have a visible hierarchy of important roles, or only determine success by one or two metrics (such as financial outcomes or initiation of new tests only). We find practical ways to interpret our larger goals at working levelsincluding, for example, Quality, Science and Service You Can Trust.