Are These 8 Profit “Leaks” Undermining Your Business Success?
In the previous article, we defined that one of the biggest hindrances in business success is the leaks in the bucket in terms of running an effective organization. Here, we identify 8 of the Leaks that are potentially detrimental to your business results.
Factors Affecting Business Success & Growth:
The following are some common leaks found in most companies:
1. Lost Productivity in B and C Players
Profit Leak #1: Are You Losing Productivity on B and C Players?
Your internal processes do not properly identify B and C performers. Even when you do identify them, it takes too long to take action. You classify people as “A Players” for the wrong reasons and the real “A Players” quit, get fired, or are not engaged anymore.
You should never skimp on who you hire! B and C players perform at a lower level, are less productive, and waste the most time and money in a company. Immediate action must be taken for employees who do not meet the requirements set for their position and should be replaced with A players.
2. Poor Leadership
Profit Leak #2: Is Poor Leadership Holding Your Company Back?
By allowing poor leadership, you are deciding the leader has more to offer than everyone else put together… a fools bet. Your poor leader causes everyone around them to perform at lower levels, you lose access to a lot of great ideas, and people are less apt to willingly give extra effort.
Only 30% of all workers could be said to be “engaged employees”. These are the employees that go above and beyond. But what about the other 70%? Research indicates that leadership is the primary difference. A poor leader destroys the work environment causing an employee to become unmotivated. Unmotivated employees put forth minimum work effort, and the gap between full effort and minimum effort represents lost opportunity for your company. It’s possible you could double your profits just by focusing on improving employee engagement.
3. Tactics Instead of Strategy
Profit Leak #3: Are You Too Focused on Tactics Rather Than Strategy?
Organizations are losing lots of time and energy zig zagging and starting and stopping because there is not enough thought given up front to desired outcomes and best paths to getting them.
Great leaders challenge employees to find shorter paths to greatness. They question whether there are better ways to approach tasks. They question whether people have the right priorities and if there are too many to begin with.
4. Lost Performance to Unfilled Positions or Underinvestment in Functions
Profit Leak #4: Are Vacant Positions Affecting Business Performance?
Most organizations are so caught up on what a position costs them that lose big opportunities. Existing people are getting burned out and current efforts are not done well because people are spread too thin.
Vacant spots in your company could be preventing money from being made! When you hire valuable employees, they produce and save money for your company. The key is finding the right people to fill these vacant positions.
5. Retention Issues
Profit Leak #5: Do You Have Retention Issues?
How much does it cost you to find each new person, how long does it take you to rebuild that institutional knowledge, what impact does this have on customers, what impact does it have on the overall flow of the organizations, how does it affect productivity, how much time does it take to train someone, how does it affect the trainers productivity, and if you add it all up what is turnover costing your company every year?
Keeping employees needs to be a core competency. High retention issues normally is a result of a negative work environment caused by poor management and/or leadership.
6. Lost Opportunities
Profit Leak #6: Is Your Business Strategy Causing Lost Opportunities?
How many deals did you fail to win because of a bad strategy? How many opportunities do you not have an opportunity to quote and would have won but the prospect had no idea your firm existed? How many opportunities did you lose because your sales processes are broken?
When you have a good strategy in place, regardless of how well the economy is doing, you should be able to grow greater than your competitors.
7. Lost Customers
Profit Leak #7: Are Your Customer Attrition Rates Too High?
How many customers did you lose because you fail to be provide value that is meaningful enough for them to stay loyal. How many customers did you lose because there is no one person in monitoring, managing and leading the overall customer experience to making sure that it is consistently high?
8. Increased Cost From Mistakes
Profit Leak #8: Do You Know What Mistakes Are Costing Your Business?
Unfortunately, there is not a section on a financial statement to measure mistakes. Mistakes happen in every company; however, you can learn how to limit the amount of mistakes that are made.
Start by answering these questions: How closely are you measuring the 5 to 7 processes that drive your business? What leading indicators do you use to tell you that they are all functioning at optimal levels?
Free Business Assessments
One of the first steps toward increasing your business success is to identify where your leaks are in your business. If you are interested in a business assessment, let’s schedule a time to further discuss your business “leaks” and how we might work together to patch up your leaky bucket. Contact us for a FREE consultation at (305) 722-7216.