2 key factors to improve your financial results that your CPA will not tell you about

Everything you do has an impact on the financial result of your company. It impacts sales or it impacts costs. And there are 2 areas that influence both sales and costs.

Increase sales: the 80/20-rule of your finances

I am a big fan of the Pareto-law (80/20-rule) so let’s see how it works here: 80% of your results are determined by 20% of your activities. Which activities? Just look at your financial statement and it will tell you. How many lines can you count on your statement for sales? Only a few.

If you look at your costs, there are many more lines detailing all kind of expenses.

Do you see how powerful are those few lines on sales?

So put enormous effort in increasing sales because low sales is the number one reason why business fails.

Do you have a defined sales process? What do you sell, to whom? Do you have a full pipeline of leads and opportunities? The best way to learn everything about sales is at Cardone University.

Self-serving way of cost reduction: cutting costs

We all hear about it every day: dismissing people, reducing workforce, cutting salaries and wages. Costs reduction in its direct form.

Because it is self-serving it does only a little good for your short-term results. But it hurts people. It often hurts your customers. It puts your quality at risk and creates distrust and opposition among those left behind in your company.

Drastic cost cutting is a result of lazy leadership of those postponing decisions until they are forced to make them.

There is another way, though, that serves both you and your customers and guarantees permanently improving results.

Customer-centric way to improve your financials

Reduce costs in an indirect but strategic way by working on quality and efficiency (time) in every area of the business.

Your customers (and any other customers) are satisfied if the quality of your product or service, the time it takes to receive it and the price they have to pay for it, are in balance.

Improving quality reduces costs and improves sales

If you reduce mistakes, reduce inconsistency of your product or service and everything you deliver, you will save time. You will reduce the scrap rate. You will need less material and you will have more time left to do the right thing.

This will increase your capacity: you can produce more with the same or with fewer resources.

While improving consistency, predictability of your outcome reduces costs; it also has direct benefit for your customers. They are more satisfied because you deliver what you promise, in a consistent way.

With improved quality you create happy customers who stay with you, come back to you and refer you to others. This increases your sales.

Improving efficiency increases your capacity and speed

Simplifying your processes, by taking out steps that do not add value, shortens lead times. Speed is the number one distinguishing factor if your quality is similar to your competitors. Being able to deliver faster than others, not (only) by working harder but by working smarter, gives you a competitive advantage.

It also increases your capacity because you can do more in the same time since you have shorter processes. With your freed-up capacity you can serve more customers without adding resources, while doing so your margin increases.

Being fast and flexible due to simplified processes will satisfy your customers and bring you more sales.

Conclusion

While never ceasing to increase your number of leads and customers, relentless focus on overall improvements of quality, predictability and speed will improve your financial results.

With the HerkuLess® profit improvement tool you can start immediately to increase your bottom-line in an effective way.

Beat the average.

Yours,

Peter

This entry was posted in Uncategorized. Bookmark the permalink.

Comments are closed.