Making money isn’t the only reason to be in business — but it’s the only way we stay in business. Savvy owners know that the top line is for ego and the bottom line is how entrepreneurs keep score. They also know that it’s not what you make that’s important, but what you keep. I believe that the best way to insure long term health and sustainability is to create a culture of profitability.

While many entrepreneurs don’t like to talk about profits and many see it as dirty word, everyone on your team should know that profit funds raises, bonuses, and benefits; it fuels opportunities; and when the economy is weak, profits safeguard jobs.

You can connect your employees to profitability in much the same way you connect them to sales and service. Show them what works by giving them the data behind it. If you are uncomfortable sharing dollar figures, use profit margin percentages. (Maintaining your margins — particularly your gross margins — demonstrates operational efficiency; improving them demonstrates operational excellence.)

Every employee needs to be invested with you in building and growing the company. It starts with forging — not forcing — the right culture.

We know that the better information we have, the better decisions we are able to make. That holds true at every level. Awareness also means that everyone in the company should be aware of and on the lookout for opportunities to improve profitability. This requires training and retraining your employees to identify profit drivers. They can be as small as a thermostat setting or as grand as eliminating wasted materials, returns, refunds, mistakes, spoilage, and employee theft. Paying attention pays off.

Here’s how a client I was working with created a culture of profitability:

Several years ago, Four Hands, a home furnishings importer based in Austin, Texas, decided to face head on the challenge of managing costs and increasing profitability. The company uses quarterly themes to drive specific goals. One quarter they made creating a culture of profitability their major focus.

Matt Briggs Four Hands CEO, created the theme The 777 Challenge. The goals were: $7 million in top line sales, $7 million in open orders (a leading indicator of future profits), and $700,000 in bottom line profit.

We held a company meeting, shared where we were spending our money and how much of it was going into training, raises and bonus for our great team. We then broke the company up by departments and asked each employee to answer 3 questions:

  • What can I do?
  • What can my department do?
  • How can my department work with other departments to reach the goal?

Imagine having everyone in your company focusing on both the top line as well as on profitability.

Each department presented their ideas, and one person took ownership over each action. Then each employee received a 777 t-shirt. If the company reached one “seven goal,” they could keep the t-shirt. If they reached two sevens the company would throw a party, and if they reached all three sevens, everyone would receive a juicy bonus (with a number in the sevens, of course) and the company would throw an outrageous party.

The company posted its progress each day and it reached all three sevens with three days to spare. The quarter was a milestone for the business and set a new standard for profitability. It was the first of many quarters to follow they achieved double digit profitability.  And oh, what a party they threw!

Are you interested in creating a culture of profitability for your company? Contact me at 804-741-5771 or at rich@coachtothebest.com. Click here to learn more about my programs and how I can take you and your company to the next level.

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