Catch the Profit Robbers and arrest them before they steal your business from under your noses ..
To implement a profit improvement strategy in your business you need to look not at your profits but at your profit potential – and identify those factors that are preventing you from realising it. Let me introduce you to a concept I learnt from Barry Schimell in USA – the PROFIT ROBBER.
Every business, whether it is a care home or a factory, has unrealised profit potential. If you do not have appropriate systems or an appropriate culture in your business, a skilled Profit Coach will be able to in find opportunities to improve your profits in almost every area of your business, but one of the best places to start is by identifying unnecessary costs.
Profit Robbers
There are numerous costs that are not perceived as adding value. Some of these – such as insurance, office supplies, operating systems, and accounting procedures – are unavoidable. They must be accounted for as necessary overheads, although even here a skilled Profit Coach will often be able to help you make savings.
Other costs are simply a drain on your bottom line. They are hidden costs that do not add value in the eyes of your customers or clients, but which also do not contribute anything to the operation of the business. These expenses are “profit robbers“. Your profit improvement programme should be designed to identify these profit robberts and arrest them.
Profit robbers can often be identified by the terminology used to explain them away, such as words beginning with MIS, RE, or UN:
|
MIS
|
RE
|
UN
|
|
Misunderstood
|
Restock
|
Unclear
|
|
Mistake
|
Retrain
|
Undone
|
|
Missed clients
|
Redo
|
Unkept promise
|
|
Mistimed
|
Redeliver
|
Unnecessary
|
|
Misplaced
|
Reposition
|
Unfocused
|
These are just a few examples. Regular profitability reviews will reveal many more profit robbers in your business.
Bottom Line Opportuities
You must be constantly vigilant in identifying activities that rob your bottom line of its profit potential and at least minimise them, if not eliminate them altogether.
Every profit robber you arrest will create more bottom line opportunities for you. The additional profits realised will add value to your business and create competitive advantages.
Looking at the list above, you can see they represent examples of “waste” in some way or another, but these types of cost are never or rarely measured in the Profit and Loss Accounts of businesses.
The problem is that it is your team that are the people who have the best chance to spot these “profit robbers” in their day to day work. But why should they be bothered?
They never see financial statements, even if any of these costs are recorded anywhere. They normally don’t stand to benefit from any profit improvement by preventing waste.
I have found in my work with businesses that if you can find a way of tuning into radio WIIFM (what’s in it for me), you can incentivise your team to become more aware of these issues, and turn them into Profit Police.
Turn Profit Robbers into Profit Improvers
You need systems to help you catch the profit robbers in your business and implement procedures for arresting their unprofitable activities. This is easier said than done, but it is possible.
It is hard enough earning a living in today’s economic climate, without wasting profit by letting it be stolen away from you right under your nose. The easiest way of preventing this happening, is to find a way of changing the way you have always worked by introducing a profit culture into your business, and incentivise your team to not only find those Profit Robbers but arrest them!
I wish you every success in recruiting some of your team to join your “Profit Police” – let me know of any “arrests” you make.