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Are your profits growing, static or declining?

Cathy Winston on Feb 6th 2018
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There are normally 2 or 3 reasons why your profits are static or declining. According to the business experts this is known as the beginning of the end, so it is important to recognise the signs and look for other sources of growth.

Chris Zook & James Allen in their book  ‘The Founders Mentality’ captures the extended list of reasons for static or declining profits, however I am going to focus on two that can be remedied quickly with more focused conversations.

Firstly: Companies lose sight of their customers.

My experience over the last decade of working with Irish Businesses saw that there is an over-focus on new sales and finances and an under-focus on being “best in class” for delivery and service. The company reaches for the illustrious new customer and fails to care for current business.

This is a very dangerous cycle to get caught in as it leads to a slow decline in margin and profits because the repeat business chain is broken. As service slips over time, customers are forced to seek out competitive products or services. Would you continue to go back to a supplier where the service is continually dropping and your custom is no longer important to the owner?

Secondly: There are inadequate resources to manage the existing business, let alone business growth.

In this case your employees are pushed to the pin of their collar to get through the workload, and then your business suffers a huge fall out.

When there are fewer people in the front-line serving the customer, they cannot possibly meet the required level of satisfaction, and they must resolve customer conflict daily, even when they have no power to make change.

Most employees become disillusioned and lose interest or eventually leave the company. Would you want to work on a project where every day you worried about the customer’s reaction to the level of service they had received?

If you sense that either of these situations could be evident in your business, then it’s time to refocus yourself and the company.

This is easier than you might expect, as it mostly requires thinking time and more conversations that matter for the business.

 

So if you were starting again tomorrow without a single customer, what would you do?

Get your team together and start asking some of the following questions:

 

  • What are your customers needs today?
  • Are you meeting them?
  • Are you adding value to their business and are you helping them to succeed?
  • How satisfied are they would you think?
  • Where would they score you on the Net Promoter Score in recommending your company to a business colleague?
  • What are the major changes in the industry and what are the anticipated trends?
  • How will this affect your customer?
  • Does it give rise to 2-3 new ways your could add value or lead to new products or services.
  • Where next?
  • Where will this business be in 3 years time if the industry is changing?
  • What will production look like?
  • How will you be selling?
  • What skills will your team comprise of?
  • What will your innovation process be?
  • What will your profits be?

 

It all starts with one conversation where employees can voice concerns, share feedback, suggest new ideas and feel valued.

Conduct some market research, talk directly to your current customers to understand their needs and expectations, and work with your employees to deliver the best service and standards in the market.

If you have any questions or need guidance please contact me directly cathy@cathywinston.ie

Written by Cathy Winston.

Edited by Lisa Downey.

 

 


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