Employ Specific Strategies for Specific Results

Increasing Profits

1) To increase profits by 10% in 3 months

With this sort of short- term goal, more is better. Both promotion and production must be increased quickly and efficiently . We would start with the revenue line and sell aggressively, making sure that every part of available capacity is filled with work priced as fully as possible. This requires that you know where you can accomplish additional work, and then that you sell into those areas of opportunity. Once again, close cooperation between those selling and those completing the services is essential. It is best if these relationships are built on bases other than simply filling the gap or meeting the monthly target. A longer-range vision, shared plan, and collaborative approach to joint decision-making are some of the keys.

2) To increase profits by 50% in 1 year

To accomplish such a goal, it is essential to know the leverage in your P&L structure. For example, with our companys cost structure, we would improve net profit by over 50% with only a 4% improvement in three major factors: volume of work, price per unit, and cost of sales. This is to say that with a 4% increase in sales volume at a 4% higher price and 4% lower cost of sales, simultaneously , we would enjoy a greater than 50% increase in net income! It would therefore be important to address opportunities in all three areas.

We would also use what we know concerning the relative margins among profit centers and match the best of those with market opportunities to optimize income. We would want to invest in those areas with the best of both (profit margins and market opportunity) to improve both capacity and sales/marketing ability.

Reducing Expenses

1) To reduce expenses by 10% in 3 months

When seeking to achieve short-term goals, it is important not to lose sight of the more distant future. In this case, we would reduce costs that would not jeopardize the longer-range future and at the same time achieve the 10% savings. We would examine each expense and analyze the long-term consequences of reducing it.

In our companys history, it has been possible to achieve this by working within three areas: general business expenses, employment costs, and travel. One solution is postponing carefully selected capital expenditures, consulting expenses, and marketing materials. Decreases in employment expenses entail reducing the number of temporary employees , freezing new hiring (with exceptions), and minimizing replacements . However, we would not directly reduce employee benefits. That would be detrimental to the more important goals of retention and motivation and therefore our longer-range success as a people-based service company. Finally, we save significant travel expenses by substituting teleconferences and videoconferences for secondary face-to- face meetings.

2) To reduce expenses by 10% in 1 year

It is essential to think and act in terms of managing costsnot merely cutting. This, however, means approaching costs as flexible and thus possibly making reductions. Historically, we have had great success in managing all costs in selling, general, and administrative expenses closely.