The Leaky Bucket Principle

Business Challenges

One challenge that I have with every leader that I meet, regardless of their level of success, is to respectfully help them understand where the leaks are in their business. These “leaks” are the aspects of the business that are not running optimally or efficiently.

The challenge for most leaders, especially entrepreneurs, is the processes that they use to lead and manage the business are broken and this causes them not to properly identify, discuss, and address opportunities for growth, profit and productivity. These business leaks are often much larger than they realize.

The Leaky Bucket Principle

As a visual, I like to refer to this as the Leaky Bucket Principle, as all companies have leaky buckets. One of the reasons I hated accounting was that I noticed that you could do a great job of getting debits and credits correct, and still go out of business. It frustrates me that there is no financial statement where an owner can see the many things a business fails to do correctly and more importantly, they are not capturing their leaks. Many times those numbers are much bigger than the numbers they are capturing. Over time these can add up to big numbers.

For example, I met with a company this week that did over $200 million quotes last year, but only $16 million in revenue. Now the real question is how many of those quotes could they have had once we close all of their leaks because of pricing mistakes, broken relationships, and other issues that could be addressed by the company?

Is Your Business Running at Peak Performance?

Have you identified where the potential leaks are in your business bucket? The first step toward increasing your business success is to accurately identify the “leaks” and to work toward patching the places where your profits are not fully being captured. In the next post, Are these 8 “Leaks” undermining your Business Success?, I will share some of the most common leaks that I see in businesses today.

Your Business is a Leaky Bucket

Using the metaphor of a “Leaky Bucket,” Howard Shore addresses the 15 most common issues in the areas of people, strategy, and execution that drain energy, direction, and profitability from every business. Shore provides a practical guide on how to effect change and ignite growth in the leadership team in order to achieve an organization’s full potential. The principles outlined in this book lead to clear and purposeful direction, a stronger, invigorated leadership team, and maximum growth and revenue, all while reducing workplace drama.