Keeping Profits

Big Bun, Small Patty

Too many CEOs are experiencing concern that despite rising revenues, profits are not following suit. It reminds me of the old Wendy’s commercial — “Where’s the beef?” Big bun, small patty. What difference does the size of the bun make if there’s hardly any meat inside?

The same can be said for revenues that grow without a corresponding increase to the bottom line. What’s the point? There may be short-term reasons to boost market share instead of profit, but such growth is not the ultimate target. Profit is the goal. Profit is good. Good for you, your staff, the company, shareholders and customers too.

Don’t get stuck giving excuses for lower returns based on factors endemic to your industry: labor costs, supplier price increases, competition, etc. These issues are much the same for everyone. But that doesn’t mean you should just ignore or accept them.

Do what your competitors are neglecting to do. Raise your company’s Profit IQ.

Make sure everyone in your company knows how you make and keep money on a sustainable basis — i.e., without cutting corners and sacrificing quality in the name of controlling expenses.

And let each of them know how they affect either or both of those areas – boosting earnings and minimizing expenses. Show them how their efforts tie directly into profits. Then identify three or four key income metrics and three or four key cost metrics to share and track. Educate your staff and give them the financial literacy needed to understand how they boost (or depress) the bottom line.

After your team understands how the company makes money and sees how their efforts impact it, you will be amazed at how well they start solving the issues that are cutting into profits.

Eure Consulting