Many of you are making plans and goals for next year and today Scott shares three pro-tips to help you make better plans that increases business profits. Everyone makes plans, but the purpose of this episode is to bring clarity and perspective that set you a part.

This episode is a follow-up, a deeper dive, of Peter Burke’s interview on ‘Three components leading to business profits’, which is the previous episode.

Show Notes

 

Three Components of Profit

  • Profit is a lagging measure of the business contribution to customers, employees, and community.
  • Profits require serving by enhancing the customer’s gain and reducing the pain.
  • Profits require leadership and organization skills using the process “make it, sell it, keep track of the money”.

Profit Types

  • Basic Equation: profit = revenue minus expenses
  • Operational Profit is money left over from direct business activities.
  • Net Profit is money after paying for every thing.
  • Owner’s compensation is not profit.

Three Pro-Tips to Plan for Profits

  • You create better plans and goals if you use leading indicators.
  • You create better plans and goals by knowing what your business contribution is to customers and employees.
  • You can create better plans and goals by implementing a few key performance indicators?

Profit is a Measure of Past Performance

  • Profit is a lagging indicator. If so, you don’t chase profits because you can’t, you can only measure them.
  • Chase the things that influence profit.
  • Reducing the customer pain.

Practical tips for Implementing KPI’s

  • Choose only a few to use, especially, if this is the first time.
  • Simplicity is a name in the game. Make an easy to track make them obvious for you and your employees.
  • There is no one single KPI set that covers every businesses.Find the ones best suited for your company.
  • Link your KPI’s to people, but measure task.
 

Links to Resources

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