Guest Column: Unlocking Hidden Value in Your Company
Andrew Miller is a member of my Private Roster Mentor Program, and a member of the Mentor Hall of Fame.
Unlocking Hidden Value in Your Company
By Andrew Miller
Business owners take note: there’s a treasure trove of value just waiting to be found in your business. What, you don’t believe me? Well, read on and let’s see.
Most companies are so focused on one or two key opportunities or challenges that they tend to overlook many of the obvious ways to increase profitability.
Raising Prices
Why are so many companies hesitant to raise prices? Too many business owners avoid price increases because they undervalue their products and services (and themselves). If you doubled your prices tomorrow, would you lose more than half of your customers? Probably not. So why not do it? Of course, you might consider doubling your prices extreme, so how about a 10% increase? Or 20%? People will pay for value. Provide value, raise prices. End of story.
Commercializing Intellectual Property
What about all of the intellectual property you have developed over the years? Do you think that has any value? Of course it does. An acquaintance who recently sold his medium-sized business told me that the one thing he regrets is not commercializing the proprietary software he had someone develop for his company’s internal use. Had he done so, he would have had another asset to sell to other businesses, creating new customers. Instead, the software was included in the sale of his company. He left value on the table.
Reducing Labour Intensity
Do you think reducing labour intensity can improve profitability? I hope your response is “yes.” What if you could find two more hours per day to focus on business growth, customer service, or product development? Wouldn’t that be valuable to you? I can do that for you. Every activity carried out in your company must add value. That means that you should be able to answer “yes” to at least one of these four questions:
- Does the activity directly impact profitability by increasing revenues, reducing expenses, or both?
- Does the activity improve customer loyalty and satisfaction?
- Does the activity help attract and retain the top employees and business partners?
- Does the activity help with the sustainability of the company (ie. regulatory compliance, etc.)?
If an activity or process is not adding value in any of these ways, stop doing it. Take a close look at the day-to-day running of your business and you will see how much time can be freed up to pursue growth by halting activities that are not adding value. You will feel like you have been freed from the shackles that have been hindering your success.
Developing Talent
Talent development is another area where businesses often fail to make the connection between profitability and performance. But bad decisions cost your company money. It is imperative that management be empowered to make decisions and provide the right level of support. Of course, not every decision is going to be the right one, but good leaders are willing to take risks and learn from any mistakes they make. Are you empowering employees to make decisions that are in the best interests of your customers? If not, you will have challenges staying afloat. Good employees will leave because they don’t feel wanted or respected. Customers will leave because they don’t feel appreciated. Instead, instill a culture where trying something new is encouraged, not punished.
I have worked with a lot of executives and business owners over the years and have heard a lot of different excuses for not pursuing opportunities that could improve performance and profitability. My response has always been, “If you are not pursuing opportunities to increase the profitability of your business, why are you in business?” It is easy to make excuses for poor performance or put off doing what you know you need to do, but that won’t add value. I have just given you four ways to increase profitability. Some of these ideas wouldn’t cost a penny to implement. So what’s your excuse for not moving forward with at least one of them?
Andrew Miller is president of ACM Consulting Inc. (www.acmconsulting.ca) and works with organizations to generate dramatic operational and financial improvements and increase their performance and profitability. He can be reached at 416-480-1336 or [email protected].
© Andrew Miller 2011. All rights reserved.
