Run the Profit Ball   Without Fumbling

Championship Profit Audit

Company executives are like great coaches. Take stock of your team by answering these 12 questions. It will help identify where your organization's real profit opportunities are hiding.    1. Are we selling to enough new customers?    2. Are we selling enough to our existing customers?    3. Are our customers bragging about doing business with us?    4. How can we boost the number of customers?    5. How can we increase the value of each customer's transactions?    6. What can we do to bring customers back more often?    7. What internal conflicts have an adverse effect on quality, timeliness and customer satisfaction?    8. What redundancies occur within tasks?    9. Do we have long-term, motivated, loyal employees?    10. How can we raise the perceived value of our enterprise's products or services so that customers will pay more?    11. What do customers expect from our business, products or services?    12. How can we improve the processes in each department and the company at large?

Coaches and players must come up with game plans and learn from their missteps, or fumbles, in order to build a winning team. The same applies at your company. Managers must devise and execute a game plan and learn from the fumbles that hurt your enterprise's ability to score profit touchdowns. This is always an important element of corporate success, of course, but it takes on added significance as we start to emerge from a difficult economic slump.

A New Way of Looking at Your Company

Your company's earnings game plan should partly evolve from a profit audit (see right-hand box) and partly from uncovering and working to eliminate profit fumbles such as:

• Employees being unclear about the company's mission and how they fit into it.
• Staff members requiring retraining after time and money were spent to teach them how to handle tasks efficiently.
• Shipments being mismanaged and having to be redelivered.

You'll notice, for the most part, words indicating profit fumbles typically start with one of three prefixes:

• Mis-, as in misunderstand, mistakes, missed deadlines, mismanage and misplace.
• Re-, as in restock, retrain, redo, redeliver and reposition.
• Un-, as in uncertain, undone, unreliable, unnecessary and unfocused.

Take a look around your company and ask employees at all levels and in all departments where they see these types of fumbles. Then, assign a negative dollar value to each fumble that keeps your organization from reaching its full profit potential. For example, have you mistreated customers and driven them away? Have you generated unplanned or unnecessary expenses? Or do you have a warehouse full of unsold inventory.

Once you start putting a value on these profit fumbles, you can add them to your income statement for a clearer picture of how they affect your organization's net profit. Historically, unidentified and unmeasured profit fumbles are buried in lower sales and inflated costs of sales and overhead. But once you start quantifying profit fumbles, as this example shows, the picture changes:

Once the profit game plan is written down and you have made someone accountable for each element, the team has a clear sense of what it can do to enhance your company's profitability. The financial goals create expectations, which in turn create results. In the end, everyone wins, including your customers.

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