Hidden Areas for Profit - Stay Lean and Mean

Hidden Areas for Profit Stay Lean and Mean

One area which is often overlooked when businesses are seeking new areas for profit within the company is staffing levels. Often business owners think that they are on top of their business, and are proven wrong when they must cut costs, often finding that they are in fact over-staffed.

For example, when the economy tightened up in the past two years , we knew we had to tighten our belts as well protect profits. It was interesting to find that we were overstaffed by 4 or 5 people (out of 55) and didnt realize it. We were overstaffed by 5 people (actually 10% of employees ) at a fully loaded cost of around $3000 per month. Thats $15,000. Often, entrepreneurs and business owners end up focusing on much smaller concerns, instead of running their company in a lean and mean manner. In comparison to staying on top of staffing levels, spending two to three hours figuring out how to save $100 on the new printer doesnt seem very wise. Rather, I think that three hours might have been better spent locked down in the conference room or war room with the leadership team asking the tough questions. Questions like:

• If we had to live with one less administrative person, who would it be?

• What things wouldnt be getting done if we removed him/her?

• Who could pick up the slack ?

• Will there be any impact on customers?

• Can we reallocate that administrative person to a revenue generating role, instead of simply firing them?

That, in my opinion, is leadership. That is what the smart CEOs are doing and should not just be doing in times of crisis. It is vital to go through this process each year in order to stay lean and mean and thus, benefit from a hidden source for profit.

Communication is also a crucial step in this process. Being up front and honest with your team is important. Let them know the reasons why changes are made; dont just make the changes. If you simply eliminate positions without that communication, you will lose credibility and trust, and the companys morale will inevitably go down. Your good (and bad) people will look for other jobs, and the good ones will find them. And if you lose your good people there will likely be a negative customer impact, causing the sales and profits you aspired to gain to evaporate. In addition to communication, offering a change of position to a revenue producing side of your business is a great option when seeking to reduce staffing levels. This gives the employee an option, and also keeps the focus on staying lean and mean and on growing profits in the company.