Running a business is like navigating through a constant sea of change, and challenging economic conditions only add to the storm.  Having a plan with clearly defined objectives coupled with the will to implement that plan will get your business sailing smoothly and on course.  Through countless meetings with entrepreneurs and business owners, I have compiled a list of 50 easy-to-understand ideas to lead your company toward improved profitability.  So here they are…

Planning for success

• Prepare a strategic plan with 1-year, 3-year and 5-year goals.  
• Determine up to five key success factors for your business.  Monitor these factors weekly.
• Implement and monitor a budget.  It could save you thousands of dollars each year.
• Each year, abandon up to 10 percent of your business that is not aligned with your strategic plan.
• Seek input from outside your organization.  The cost of professional advice is not material when dreams become realities.
• Create an “exit” strategy now.

Improving business operations

• Benchmark revenue and overhead percentages to the leaders in your industry.  Determine what is needed to pursue the best in your industry.
• Establish an advisory board of key clients.
• Think of every product or service that your company sells as if it were a separate business.  Does each one contribute to profitability?  Identify profit centers.  Keep the winners and lose the losers.
• Develop a cost accounting system to determine exactly what it costs you to deliver a service or product.  Costing has to be fully loaded and comprehensive.
• Conduct a client/customer satisfaction survey every year.
• Revitalize aging products and services.  For example, when people stopped baking, Arm & Hammer found other uses for baking soda, i.e., refrigerator, freezer, toilet, sink.  What other uses can you find for your products or services?  More reasons to buy mean more revenues for your company.
• Listen to your employee’s complaints about tedious tasks.  Their ideas may result in eliminating, modifying or outsourcing the work.
• Give your customers what they want!  If you’re meeting a need or desire, they’ll buy – and pricing won’t be their main concern.
• Include a guarantee on your invoices – “If you do not believe you received the stated value for our service (or product), mark through the amount shown and remit what you believe is reasonable.”
• Enter into joint ventures or strategic alliances with your suppliers or customers to market each other’s products.
• Engage a CPA firm that has national and international resources and represents other businesses similar to yours.  Their knowledge of your industry and operations of similar businesses will be invaluable to you.
• Test price increases to selected markets or along product lines.

Controlling cash flow

• Remember, income can be increased infinitely, but expenses can only be reduced to zero.
• Sell off idle assets – unused vehicles, vacant real estate or unneeded machinery.  They can derail a company’s cash flow and grind an organization to a halt.
• Reduce inventory to the smallest amount possible while still meeting customer demands.  Use this cash flow to pay down lines of credit or other debt.
• Get vendors to place inventory in your store on consignment.
• Receive your bank statements unopened and review the checks.  This simple internal control procedure will help minimize misappropriations and monitor payments to specific vendors.
• If you feel your bank loan is choking your business, ask the bank to restructure your loan.
• Secure competitive bids for all major expenditures.  Everything can be bid out.  Define your specifications carefully.  Challenge suppliers to bid price and value-added services.
• Attack the collection of accounts receivable beginning with the most current first.  Work your way back to the oldest accounts as time is available.
• Never let the excitement of receiving a new customer overshadow the need to obtain solid credit information.
• Develop a daily cash report for key executives and salespersons who need to follow up with accounts receivable.
• Reduce labor costs with part-timer – you don’t have to provide fringe benefits.  It costs you 20-40 percent less to hire two part-timers to fill a full-time job than it costs for one full-timer.
• Shop for insurance often.  Make sure you deal with solid companies, but don’t let them get complacent with your business.
• Thoroughly review the audit of your workers’ compensation insurance.  Make sure you are not paying extra on overtime wages.  Verify that employees are classified in the proper risk categories.

Managing your company

• Instill a sense of urgency throughout your business.
• Make sure your team knows what is expected.  How many sales calls do you want your salespeople to make?  How many shipments do you want shipped each day?  Measure and track it.  People will play the game when they know how you keep score.
• You will have a much better understanding of what is actually transpiring when you regularly get out of the office and visit with customers, talk with your employees and observe actual operations.
• Identify the key positions within your company that have contact with customers.  Put the right people in those jobs.
• Spend extra time and money on training so employees are prepared to do the tasks assigned to them.  This improves client service, employee morale and company profits.
• Relate compensation to productivity for everyone in your company.
• Develop and annually update a personnel guide to provide a consistent application of rules and conduct.  Be sure to review your guide with your CPA and attorney for appropriate tax and labor law compliance.
• Develop a CEO monthly letter to employees to build teamwork and communication.
• Departmentalize your company budget and hold your managers accountable for the variances.  Be sure to reward positive results.
• Emphasize communication skills.  Create a Toastmaster’s group within your company.

Keeping good employees

• Be creative with fringe benefits.  Think out of the box and provide low-cost or no-cost benefits that improve productivity – casual day, flexible hours, half-day off on children’s birthdays, loans for school or computers, organized car pools, etc.
• Invest in your people.  Develop an incentive compensation program to reward key personnel.
• If you don’t have a cafeteria plan, consider adopting one.  All employee contributions to the cafeteria plan are exempt for most payroll taxes resulting in a direct savings to the company.
• Maximize retirement plan benefits for your employees through 401(k) plans, medical reimbursement plans and defined contribution/benefit profit-sharing or pension plans.
• Employee evaluations are essential for communicating progress.  Customized forms are preferable to canned evaluation forms, but both work.  New employees should be evaluated at least semiannually the first year.
• Your employees are your ambassadors.  Reward them for their public relations efforts.
• Make a point of rewarding outstanding performance in the presence of that person’s peers.
• Send personal notes of congratulations or thanks to employees at their homes.
• While compensation needs to be fair, studies show true employee motivation comes from providing recognition and appreciation for a job well done.  This should never be overlooked.