No one goes into business with the intention of losing money. Yet a preoccupation with busyness often short circuits our decision making ability and prevents us from capturing small opportunities that can make a big difference on the bottom line.
The inclination to stay busy is natural, but adopting the daily discipline to seek only the most productive activities is wisdom; the ability to predict tomorrow’s results based on today’s decisions.
I heard a successful owner of a $1.5 billion company say recently that “The day I show up not fearing failure is the day I need to resign.” That’s wisdom – the voice of experience and proactive thinking, the discipline to focus on what we can control. Focus on the things we can control produces peace of mind and inspires confidence and… it drives successful outcomes!
One of the first and most important things every business owner can control is protecting profits.
After all, the two main purposes of a business are to make a great profit and have the time to enjoy it – right?
So learning how to protect profit may actually be a business owner’s biggest asset. Please don’t misunderstand me here. I’m a big proponent of playing to win vs. playing not to lose. But playing to win does require a good defense as well as a prolific offense. Wise (and successful) business owners build a powerful offense on the foundation of a great defense. To accomplish that they adopt a profit-protection mindset!
Think about this: a sound defense relies as mush on proactive thinking and behavior as a sound offense. It’s not counter-intuitive at all to set up clear parameters designed to contain the opponent. That describes profit protection in the business world. In business, our biggest opponent is profit creep, which happens in many forms, and often without our awareness.
Profit creep is caused by things like improper branding, lack of a selling system, inadequate selling skills and language, poorly defined customer service systems, inadequate data sharing, poor estimating, confused procedures and many more. A profit-protection mindset takes on these enemies with a front-line defense making it possible to put our offense to work – to strategize and innovate, hire great people and capture new business.
Here are three of the most successful profit protection strategies you can implement within the next 30-90 days and literally stop the profit creep in your company and drive more dollars to your bottom line:
1) A dynamic, systemized estimating/pricing process with built-in profit protectors
Business owners committed to maximizing profit must become expert estimators. That requires a system designed to capture all job costs accurately and quickly. I meet with owners regularly who are frustrated with bottlenecks and mistakes in their design-estimating process. What they often overlook is that the estimating process is a tool to produce the minimum amount of accurate, relevant information required for the sales department to do its job – that’s it!
The only pre-sale detail necessary for producing accurate and timely estimates – bids – quotes – prices is simply that which will serve the customer well and produce the profit necessary to reach your pre-set goal. There are dozens of estimating software programs and spreadsheets on the market, none of which are worth anything to you unless they are populated with information that accomplishes those two objectives well and consistently. That means you must thoroughly research, develop and maintain a data base of accurate job costs or hire someone to help you do so. Then you can think about purchasing or creating the software best suited to deliver the results.
Two additional, and critical, profit-protecting estimating components, frequently overlooked:
1) inclusion of contingency costs factors to cover waste and mistakes (yes, waste and mistakes really do happen every day); and…
2) an options and upgrades pricing menu for real-time quote revisions, enabling sales people to serve customer needs quickly and efficiently while maintaining pricing integrity and profits.
2) A documented and trained selling system
Great profit opportunities (known as sales) are often squandered because our people aren’t trained to capture them. From the minute the first contact is made to the moment a prospect becomes our customer, every step must be strategically designed to increase the likelihood of that outcome.
Ironically, the process will also provide parameters that graciously invite the wrong prospects out of the loop so your people can focus on those most likely to become customers.
Every employee, including those only marginally involved, must know and own the selling system. Everyone must be trained on what’s required to intentionally invite prospects into your sales loop and lead them to a mutually rewarding conclusion – a signed contract.
When trained well, you’ll see a commanding difference in the way your people interface with and serve prospects and customers. That’s profit protection! To jump-start your process check out Legacy Business Leader’s Winning-Resources page.
Author Jeffery Fox notes in his provocative and entertaining book “How to Become a Marketing Superstar”: “Every job exists to directly or indirectly get and keep customers, today and tomorrow. Every person must know how his or her job gets and keeps customers.”
That’s a principle that most leaders, miss –and it’s a costly one! Train, train, train! There’s no substitute for it and nothing will have a more profound effect on bottom line performance.
3) A pre-construction meeting document trained and followed for each job
This is simply the most effective, profit-producing and profit-protecting meeting a business owner in the construction industry can have – as long as it’s done with structure and discipline. The main goal of the pre-construction meeting is to clarify expectations on both sides of the table. Done well, this meeting, held between contractor, project manager and customers (on site for remodelers) is the pinnacle of customer service and sets the tone for successful projects.
Think of the pre-construction meeting as time used to pre-empt problems and issues that routinely crop up due to poorly defined details. And customers love it because it delivers value – translated, peace of mind. It’s a platform for answering their questions and clarifying parameters concerning products, design and delivery. What’s even more important is the peace of mind that comes from knowing you’ve taken control of the process by serving your customer well – a win-win! Download a pre-construction template that can be customized for your construction or trades business – check out this link
Whatever you do, remember that planning is no substitute for action. Peter Bregman in his excellent book 18 Minutes: Find Your Focus, Master Distraction, and Get the Right Things Done, notes that “The brilliance is rarely in the model; it’s in the implementation.” And that takes focus – the one thing that will overcome the inertia of fear and produce winning results.
Why not focus on building a better defense this week in order to protect your profit and jump-start your next level of business success?
As Jim Collins puts it: “Greatness is largely a matter of conscious choice.” And know that Legacy Business Leaders is always here to encourage and support small business owners in Ohio and nationwide.