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Sunday, May 8, 2011

A Simple Look at How to Increase Your Profits - Through the Eyes of a Consultant

A Simple Look at How to Increase Your Profits - Through the Eyes of a Consultant

Let's say you have millions of dollars, money is and never will be an issue for you, and more than anything you would like to build your dream-house. You want this house to be 5 floors, and on the top floor, you imagine what would be in your opinion the ultimate room, complete with an indoor pool and a west-facing wall made entirely of large windows through which to view the multitude of beautiful sunsets to come.

The first thing you have to do is find a builder, so that's what you do. After laying out your plans to this builder, he informs you that he can absolutely build this quite large house exactly as you've asked, and it will take 15 months to build: 3 months per floor.

If you were to say to him, "Well that sounds like it's going to take about as long as I thought, but my favorite room is going to be the room with the indoor pool on the 5th floor, and I'd really like to start using that first, so do you think you could start by building the 5th floor before you build any of the other floors? If you could, that would be great." He'd go, "What? Are you crazy!?"

Now I know that seems like something an intelligent person would never do, but believe it or not, that's what many intellectually sound members of middle and upper management attempt to accomplish every week. They look at their profit and loss sheet, look at their monthly forecast, and decide that they want to increase profits. They look at cutting prices, bringing in new services or products, cutting hours, etc., however they overlook the 4 floors that support the ultimate stage of revenue and return. They're trying to build onto the 5th floor, when the bottom 4 aren't yet set up to support it.

So a good consultant might show them the following blueprints of this "house" which is their business. Once they see the following model, the solution becomes clear.

This is where I'd show you a picture of this "house", however this site does not allow me to do so, so I'd like you to imagine a house built as I'm about to describe to you. We've established that the 5th floor is profit; the rest is as follows...

The 4th floor:

To create lasting and sustainable profits, an organization needs to keep the customers that they've won. Keeping their customers must be a higher priority than winning them, otherwise the organization will be at best like a revolving door, and likely will end up perpetually spending their profits on marketing to bring in more new customers to replace the ones that they simply aren't keeping.

The 3rd floor:

To keep the customers that you've won, an organization must have a teamwork-rich environment where the "worker bees" don't feel like they just work together, but they feel like they can depend on each other and are glad to help one and other in order to really deliver what they are capable of delivering.

The 2nd floor:

To have these teams of people that work so well together, you can't just have employees that are showing up for a paycheck. They must be in an environment full of trust, and they must feel aligned with and committed to the work that they are doing. They must feel that they are a part of something that they identify with and care about. They must feel like partners.

The Ground floor:

To generate and co-create that feeling within an organization, management must have the ability to transform unrest into passion and delivery. They must have the ability to drive a shared vision, generate and sustain feelings of trust and alignment, and still oversee a given project in a planned, organized and controlled manner. We call these people transformational leader-managers.™

So you've got five levels, right? You've got profit and loss; just below that you've got customer retention; below that, teamwork; then committed individuals, and finally supporting it all you've got great leaders who can also manage well. Each level drives the success of all levels above it. If you're not happy with your company's performance anywhere up to and including profit, then your company is going to have a failing grade in one of these areas. If you find your failing grade, you've found your solution. To fix any level, you just simply fix each supporting level below it.

For example, if you feel the reason you're feeling pain as a company primarily because your employees aren't working well together, then your failing grade is in teamwork. So you work on the leaders, then the employees' commitment, then the teamwork, after which the above levels will fix themselves up to and including more profits. It really is that simple.

As a consulting firm that knows we must come to understand the heart of a problem before we can offer a solution, we at Simple Leadership Strategies™ would advise that if your company is not where you feel it has the potential to be, you start your company's endeavor toward its true potential by first asking where the pain is. Anything that happens within any organization will fall into one of the above categories.

For more advice on leadership, team-building, employee engagement and customer retention, feel free to visit the Simple Leadership Strategies website.

Jonathan P Wright,
Vice President, Business Development
Simple Leadership Strategies

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