Are You Setting Low Expectations for Your Business as a Way of Combatting the Feeling of Not Having Control Over Profitability?
Said another way, has business beat you down into desiring only small goals – or maybe not wanting to set goals at all? There are some simple and practical strategies that can help you gain more control over your company’s outcomes. The challenge is often that these strategies aren’t talked about outside of management consulting engagements.
This blog focuses on providing you information you may not be hearing consistently enough to put them into use within your company. Here are four practical steps that will help you get more control over your company’s revenue and profitability.
Step 1 – Really understand that failing is harder than doing what’s required to be successful.
Most failure of small to midsize businesses is due to not taking enough action out of the fear of being judged negatively by others. We need to get our heads around the fact that the pain of failure is far worse and longer lasting than some grinding activities required for success. When we accomplish this, we begin to see that a process of doing what’s required to be successful in business can not only less painful than failure, it can actually become enjoyable.
Step 2 – Get a simple, accurate and clear measurement stick for how you are currently performing versus what is required.
Most likely a key issue you have is that more money is needed in your sales pipeline. Without the feeling of more leads than you can handle, there is often a sense of lack with a fearful focus on conversion rates. Of course, it is smart to always work on improving our conversion rates as a way of maximising the quality of our customer educational sales process. But not as a way of combatting too few leads coming in. This sense of lack also affects pricing and profitability due to feeling the need to convert as many sales a possible.
A clear measurement sticks means knowing how many leads are required either each day, week or month to ensure a sufficiently large sales pipeline. A second number within the sales pipeline is generally also required such as the number of proposals submitted per the same period. A third important number is often the total sales (Revenue) amount for the period. A fourth measurement number is the Gross Profit (GP). With these 3-4 numbers in hand, you can begin to get objective feedback on whether you are doing what is required to hit your desired numbers – or not.
From these basic 3-4 numbers you can get more fancy and begin working toward a balanced scorecard that takes more company activities into consideration. However, if you are currently not religiously reviewing some set of simple numbers week over week and making tough decisions around correcting any numbers that are not hitting the mark on a regular basis – stay practical. This dynamic of practical and fancy reminds me of the obese person wasting time researching the benefits of straight bar curls versus preacher bar curls. They should simply begin by getting away from the computer and running around the block! It is easy to make huge improvements early on before you need to start contemplating more sophisticated strategies. In the business world this can translate to not worrying about the perfect CRM, networking group, or product presentation. Just get going and measure some simple numbers accurately to get some feedback on how you are progressing.
Step 3 – Get everyone accountable to someone or something.
Accountability gets easier with objective numbers being measured. To really crank accountability up, find ways to make everyone feel accountable to the point where it is far less painful to do what is required rather than paying the consequences for not hitting the activity goals. This can be as basic as having to report to the rest of the team what a person didn’t accomplish. On the more strategic end, try paying money to undesirable causes or people each time a key performance number is missed. My favourite is paying an ex-spouse (or even a current spouse) $100 each time the person doesn’t accomplish what they need to. When the motivation level is right, it is almost comical what people can achieve.
Step 4 – Re-plan every 90-days because humans get knocked off course and lose sight of what’s actually working.
There is a reason business breaks a year into 90 day quarters. It will serve you well to align with the dynamics of business and people in general. We need to recalibrate every 90 days to remain clear on where we are going and why.
The typical strategic company planning session requires 4-8 hours every quarter to go through the process. Company planning days (when done correctly) add clarity, urgency, and accountability to team’s just when things start getting scattered.
In conclusion, getting a handle on a company’s ability to generate a desired level of revenue and profitability is not for the lucky, it is for those who approach the process correctly and with the right mindset.
Give it a try, you have nothing and yet everything to lose. There is a reason more than 80% of business fail within the first three years. We hope this article has helped clarity that luck has little to do with business and financial success. Through our connection, you now have access to information that can make building your business a predictable success. Please feel free to contact us anytime. There is more where this article came from.