Profit Growth Strategies By Brian Tracy

Transcription

1 Profit Growth Strategies By Brian Tracy Create A Turnkey Business Introduction History will be kind to me for I intend to write it. (Winston Churchill) There are certain strategic thinking skills that can help to increase the sales and profitability of your business. Thinking about your business in terms of having it operate smoothly and profitably forces you to continually evaluate every business process and activity from the point of view of a potential buyer. When you think regularly of creating a turnkey business, you automatically seek for ways to standardize all your business activities. This process will make your business more profitable and salable as well. In this lesson you will learn how to: Determine your essential business activities Organize your business so it can be duplicated Create an operations manual of systems and methods Turn your business into a money machine 1

2 Reasons For Starting A Business Your business is an expression of your temperament, skills and personality. It is unique to you as an individual. There are five main reasons why you would start an entrepreneurial business. 1) To make a better income than you could working for someone else doing the same thing. 2) To sell your own professional services more efficiently and professionally. 3) To build a business that you can sell someday and make a profit. 4) To build a business that you can take public, making substantial returns on the sale or value of your shares. 5) To create a business that you can duplicate, either by licensing, franchising or appointing distributors. There are three decisions you need to make about your business. 1) Do you want to build a large business with many employees, or do you want to create a small business that earns you a comfortable income? 2) Do you want to own 100% of your business or do you want to share it with partners, venture capitalists, or other investors? 3) Do you want to start a business as an extension of yourself and your special skills, or do you want your business to be able to continue after you leave? Example: In personal service businesses, the business only has value as long as the professional continues to work and generate income. 2

3 Systematize Your Business According to studies involving thousands of companies, there is a normal process of business development. 1) It takes about two years to break-even in a new business; up to that point, the business loses money. 2) It takes another two years to become profitable and repay the losses incurred in the first two years. No business makes a profit in less than four years. (Peter Drucker) 3) It takes about seven years for a business to become really profitable. The reasons for these time lines are simple. Every new business consumes enormous amounts of money, time and energy just learning how to operate the business successfully in the first place. The Efficiency Curve At the beginning, every function and task of the business is hard, complex and costly. Continuous mistakes are made. The wrong people are hired and fired. Product and service offerings change to meet the real needs of the market. Fully 70% of decisions turn out to be wrong. Every new business start-up is a race against time. Does the business owner learn how to make profits rather than losses before his or her money runs out? But because man has a cybernetic brain function, he continually gets feedback and selfcorrects. He gets smarter and more competent. He reacts faster to problems and makes better decisions. As a result, the business owner gets smarter and smarter, more efficient, and makes fewer mistakes. 3

4 He takes less and less time to get more and better results. By the 2-4 year mark, he is making as many sales and as much profit in a week as he was in a month or more when he started. By learning and systematizing the key business functions, he moves down the Efficiency Curve. He begins to create a smoothly functioning, well-ordered business that generates predictable sales, revenues and profits. Accelerating the Process You can speed up your movement down the Efficiency Curve toward higher and more predictable profits by standardizing every key business function. This standardization makes it easier for a new person to learn the job, and reduces the number of mistakes. Like teaching someone to cook a dish by using a proven recipe, you create a series of proven recipes for every key task. The Franchise Model Afranchise is a proven success system. It is based on standard, proven, tried-andtrue methods and techniques that achieve the same result every single time. MacDonald s has 40,000 franchises worldwide and has never had a failure except for uncontrollable external factors. MacDonald s corporation has so standardized the processes of operating a franchise that they can tell an investor exactly how much profit he will earn on a month-to-month basis from year one. Your job is to design your business like a franchise, exactly as if you were planning to multiply yourself by 1000 or 5000 more identical businesses. 4

5 The Standardization Process The process of standardization is fairly simple. It requires a particular mindset, and a franchise-like approach to your business. 1) Begin by identifying every function or job that must be done to generate sales and profits. a) PrODuCTION creating the product or service. b) MarkETINg positioning and promoting the product. c) SELLINg the specific method for making sales. d) DISTrIBuTION getting the product to the customer. e) BILLINg getting paid for the product. f) ACCOuNTINg the procedures for receiving payments and paying bills, plus payroll, taxation and all financial functions. g) ADMINISTrATION coordinating all the activities of the business, including technology. h) research AND DEvELOPMENT the process of new product development and continuous improvement. 2) Break each job down into the individual steps that must be followed for the job to be performed in an excellent and predictable way. 3) OPErATIONS MANuAL write out a step-by-step description of exactly how each job is to be done. 4) ScrIPTINg AND DIALOgue standardize the words and activities to be used in every customer contact. 5

6 5) CuSTOMEr SErvICE develop a standardized process and methodology to deal with customers. a) How are customers to be greeted? b) How are customers to be acknowledged or thanked? c) How will customers be contacted for further business? d) How will customer complaints be handled? The Hawthorne Effect In 1928 at the Westinghouse Electric Plant in Hawthorne, New York, a series of experiments were done to find ways to increase productivity and improve performance. What they discovered was a breakthrough in management thinking. The very act of observing or paying attention to a behavior actually improves performance and quality in that area. In other words, the very act of thinking continually about your business as the model for 1000 franchises, increases and improves the operations and efficiency in every area where this thinking is applied. The more time you take to standardize your key business activities, the easier it is for people to learn them, the fewer will be your mistakes, the lower will be your costs, and the higher will be your profits. 6

7 Action Exercises 1. List your three most important business activities in terms of sales and profitability. 2. List the three areas of your business where you experience the greatest number of problems or mistakes. 3. List the three marketing, advertising or sales activities that generate the highest revenues. 7

8 4. List the three activities that contribute to the highest level of customer satisfaction. 5. List the three most essential, internal business or organizational activities that are essential to your business operations. 6. Select the three areas of your business that you are going to standardize immediately. 8

9 7. Select the three areas where, if you were absolutely excellent, would have the greatest positive impact on your business. What one action are you going to take immediately as the result of your answers to the above questions? 9