How to Increase Profit and Wages Simultaneously

All business leaders today are looking for ways to decrease costs, while increasing productivity and profit. Many businesses today are taking a one time profitability boost by reducing costs at the expense of the employees.

Cost cutting always seems to be the first action taken by companies as they try to increase their profit. I understand that some businesses are in trouble and this may be their only recourse. However, many businesses rely on this cost lever rather than looking at all the other options available to increase profitability.

Henry Ford

Most people know that Henry Ford was quite famous for piloting the assembly line factory and for increasing the productivity of his factories. But did you know that he was able to simultaneously increase profits while decreasing production costs, increasing productivity, and increasing employee’s wages?

Profit First

Transform Your Business from a Cash-Eating Monster to a Money-Making Machine

The book review for this week is Profit First by Mike Michalowicz.

Michalowicz introduces a new and unique way of managing the financial side of your business. Rather than running your business using traditional GAAP based reporting, he introduces an approach that keeps the business owners focused on profits not on Revenue, SG&A or COGs.

His point is that profit is not an event . . . Profit must be baked into your business every day, every event, every transaction. The best way to do this is to build a system that puts profit first and not GAAP accounting (although the accounting still must happen). Michalowicz lays out a simple but powerful system that does this.

Play By the Rules But Be Ferocious

“Play by the rules but be ferocious” is the advice given by Phil Knight, co-founder and past chairman of Nike. I believe that all of us need to take this to heart and make some adjustments in how we lead and run our businesses!

There is no need to be ruthless, dishonest, nefarious, or unscrupulous in any way. However, if we want to grow our businesses we need a “fire in our belly” . . . we need to be ferocious!

Can you imagine if your favorite professional sports team was not driven to succeed? I know we always complain about the overall performance of our teams (like the Calgary Flames!) but when you watch them play, they do play the game ferociously. Anything less would be pathetic!

What if this season they decide they are going to play a non-contact style of hockey? Or what if their leadership fails to create and communicate a strategic plan for the season? What if they fail to assign team members to positions or to clearly define the roles each team member is to play? What if they don’t build a sales and marketing plan and fail to reach the sales targets they need to remain viable?

Do You Have a Customer Service Chasm?

In a 2005 Bain and Company survey of 362 companies, a huge gap was identified between what customers experience versus what companies thought they were delivering.

The gap was not just huge, it was staggering! Only 8% of customers in this survey described their service experience as “superior” while 80% of the companies described the service they provide as “superior.”

Tom Peters calls this the 8/80 chasm!

I have experienced this 8/80 chasm on a few engineering projects over the years.

An engineering contract typically has a ton of detail built into it. Because of this, it is really easy to fall into the trap of “working to fulfill the contract” instead of working to understand exactly what the customer needs before you are too far down the design road to make adjustments.

When a project manager falls into this trap of managing to the contract, it is inevitable that they will encounter a customer who is not happy with the finished product. Usually, when this happens, the project is so far down the design path that the effort to get realigned with the customer’s expectations is extremely painful for both the project manager and the customer!

So what can businesses do to bridge this chasm or avoid it altogether?

The Elite Consulting Mind

16 Proven Mindsets to Attract More Clients, Increase Your Income, and Achieve Meaningful Success

The book review for this week is The Elite Consulting Mind by Michael Zipursky.

In this book on setting yourself up for success in the consulting world, Zipursky details his thoughts, techniques, mindsets, and philosophies around setting up a successful consulting business. Although I did not find any great pearls of wisdom, the book contains a lot of solid consulting advice.

My takeaway from this book is Zipursky’s 16 mindsets listed below: