Service doubles profit

GOAL clarity, keeping good staff, inspecting all parts of the operation, fixing system slippage and delighting customers will help small businesses double their profits.

British entrepreneur and TV presenter David Hall told a Small Business Development Corporation luncheon that successful individuals such as golfer Tiger Woods and Manchester United player David Beckham all had very clear goals.

“Studies show these people go through a six part process,” Mr Hall said.

“They are clear about their goals, they know why they want it, know they can achieve it, have a plan on how they are going to get there, know their strengths and use those strengths to motivate themselves. These people make the tough decisions about what they want and how they are going to get there.”

Mr Hall said business owners had to inspect their premises and not just expect things would be running smoothly in all parts of their organisation.

“Every business I’ve had to turn around had stopped listing to the world out there,” he said.

“These business had become complacent through success. Complacency breeds arrogance.

“It’s easier to change a business when it has its back to the wall and the bank manager is at the door.

“It’s much harder to reinvent a business when it is at the top of its profit cycle but that’s what you have to do.

“In the UK the average lifespan for CEOs was three years. Now its 18 months.”

Mr Hall said businesses had to watch out for system slippage – a condition created by a business growing and priorities changing within parts of the organisation.

“A gap opens between what’s supposed to happen and what is happening. The bigger this gap, the more money the business loses,” he said.

For example, a caravan dealership may have a system in place to cross sell finance and maintenance contracts with its caravans. However, over time the sales staff has stopped sticking to that system. This means the caravan dealership is losing money from lost cross selling opportunities.

“The trouble is, this gap does not appear on the profit and loss statement. If it did, managers would do something about it immediately,” Mr Hall said.

“Most businesses haemorrhage internally because CEOs don’t see it.”

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