The 3 Ps That Can Help Grow Your Business Very, Very Fast
For some small-business owners, the formula for success can get complicated. There can be so many areas to focus on, an endless to-do list, and not enough time to get everything done. However, you may be able to grow your business quickly by focusing on three areas of one simple equation: People + Process = Profit.
Business ideas can be meaningless. It’s only the execution of those ideas that make for a real business. Therefore, behind every successful company are top-rated recruits. They are what really makes any business work.
Unfortunately, many cash-strapped small-business owners may try to get new employees cheaply. They can hire the first person who seems like they could get the job done. They may look for inexperienced people they can pay low market wages to, and hope they can learn through on-the-job training. While this sometimes does work, more often, it fails miserably.
You should have patience for the slow hire. To get the best people, you should also expect to invest. This isn't the area where you'd want to focus on getting "a deal.” Hire a few great people, not a lot of average ones. Hire people who have a performance track record, and hold them to strict performance expectations. Build a corporate culture of excellence by being quick to fire anyone that doesn't perform to company standards and culture.
People will always come and go from any organization based on their personal goals. A successful company has procedures in place to train and assist newcomers in excelling at their job. These processes can become the sustainable competitive advantage for your company as each team member improves it. All processes should be duplicable and well-documented. Outline the required inputs and expected outputs, and test these processes over time to confirm they're working for your company.
Include effective procedures in each part of your business. Most companies will have them out of necessity in development and production, but usually lack a documented process in sales, marketing, customer service and financial planning. For example, in sales, you could write down the targeted prospect, how they're identified and nurtured until they buy. Then identify the process so they buy again and refer other prospects.
Too many small-business owners work for too little money, because their businesses aren't systematically designed to produce a large profit. The key is to know how your company makes money and understand what provides the most leverage for a profit. In most companies, it's a higher gross profit margin. It can be a lot easier to make money if your gross profit margin is 80 percent than 30 percent. In other companies, the intellectual property, a proprietary protected process or a dedicated distribution channel may provide the profit leverage. In addition, the more your overhead costs vary with sales, the stronger the link between revenue and profit. This can help your company remain profitable even when revenue goes down.
Increasing profit starts by understanding your company’s financial statements on a monthly basis. Reviewing the past can help you plan for the future. Unfortunately, not doing this consistently may lead to a less profitable company.