enx magazine

Did you ever know a business person that was not trying to increase the profitability of their business? There may be interim strategies to get to the ultimate goal of increased profit—like investing to rapidly increase revenue—but the ultimate goal is always greater profitability. Increased profitability is an admirable goal; it provides the share holders with a return on their investment. That return is the reason we all make investments. The million dollar question, literally, is how do you increase your profitability?

Doing more faster is usually not the answer although it is frequently attempted. I know of only one long-term approach to increased profit: A sound business plan grounded with quantified and executable actions. To be quantified, you need to layer into your plan reasonable assumptions. If one of your actions is to increase your sales team by two over the next year, you need to make assumptions about the expense, additional revenue, additional gross margin, trailing aftermarket revenue from the additional placements, and the cash flow impact. To qualify as executable, your team needs to have the skills, behaviors, and experience to have a reasonable chance of success. If you have had three different sales managers in the last two years and your rep turnover is 80 percent, adding two additional sales reps is not an executable action.

My goal with this article is to provide you with some focus areas. Business planning requires discipline and detail. Not all business owners posses these skills / behaviors. That is fine; hire somebody that does to support your business planning and execution efforts. You continue to do what you do well. But somehow, someway, write a business plan and think about some of the following areas.

Get your sales turnover under control. If your turnover is greater than 30 percent, you have room for improvement. Reducing sales turnover is like strapping on rocket boosters. Not only do you save the fifteen thousand dollars plus that each turnover costs you in real dollars, but the actions you take to reduce your sales turnover will increase the productivity of your entire sales team. What areas should you analyze to surface turnover reducing opportunities?

• Sales manager: Does he / she have the correct motivators, behaviors, and skills supported with strong processes?

• Selection process: Who are you hiring?

• On boarding process: What does the first 30 days of employment look like. Are you providing a springboard to success?

• Territory: Does the rep have a good blend of current customers and target accounts?

Sales process: Do you have processes that enable your sales team to win business?

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