Keep the Best, Then Reform or Get Rid of the Rest
•competitive strategy •profit analytics •2020 Vision •profit strategy •management strategies •new opportunities for distribution industryWednesday, August 12, 2015—What you choose to discard and what you keep makes all the difference in how you perform in just about all you do.
Much like a plant, your business may require a little "pruning" from time to time. For instance, would you shop at a grocery store that kept rotting fruits and vegetables on the shelf? No self-respecting grocery store leaves that kind of bad product on the shelves because not only does it fail to sell, but it actually discourages the customer from buying healthy products.
The best grocery stores trim off the wilted parts of plants and remove bruised or rotting fruit from its shelves. This helps to give the impression that the store always has the nicest, freshest products. Remember: Anything that doesn't sell is just taking up valuable floor space and thus eating into profits.
Winning companies do the exact same thing. They take a careful look at what is or isn't working. With the help of things like Line Item Profit Analytics, they're able to pinpoint parts of the business that are draining profits instead of adding to them. Finally, these companies are able to achieve spectacular results by reforming or getting rid of problematic accounts or products.
If you're swimming and barely keeping your head above water, the last thing you want is a load of rocks weighing you down. Yet too many companies try to capture every last bit of business on the mistaken notion that every sale is a good sale. It's important to recognize that certain accounts are bad for your business and that you should take steps to prevent them from harming you any longer.
One of our smaller distributor clients was hurting before it embraced this philosophy. They were only bringing in $150,000 to their bottom line each year but, after ditching 400 accounts, their bottom line jumped to $1.6m the next year.
Have you ever thought about how much profit your company might be losing from its bottom line thanks to unprofitable business? When was the last time you carefully examined your business and identified things you could improve or remove? If you're like our distributor client, you might find a way to massively improve your profitability without even needing to make another sale.
For more information about Randy MacLean, visit: www.waypointanalytics.net
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