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2 Steps for Increasing Company Profits or Performing
Business Turnarounds
1. Eliminate waste
Eliminate reports, habits, products, duplicate input, and
processes that waste time and money. These drain labor,
money and energy from the business.
Two-thirds of products or services sold incur more costs to
produce than they are sold for. These are a drain on
profits. These losers can be reduced by either increasing
prices, reducing direct costs incurred in producing the
product or service, reducing overhead costs allocated to the
products or services, or discontinuance of selling of the
product or service.
Some of these profit robbing costs may be found through
asking employees for feedback on duplication of efforts,
unused reports, and other wastes of time or money, or
through cost accounting or other analysis systems.
Eliminating waste increases the amount of space, labour,
time, energy and money available for other profit-making
activities.
2. Reinvest a portion of the savings in profit-generating
activities.
Once the waste reduction frees up money,
time, labour, space and energy, invest part of the savings
in continuous improvement.
Some of these continuous improvements are already in most
company's budgets. Equipment replacement (depreciation),
marketing, training and research and development are all
current cost or expenditures to generate future profits.
An analysis of return on investment of discretionary
expenditures should find further areas where the investment
will yield results. Investment should be made in a
combination of projects with short payback periods and those
with high rates of return.
About The Author
Byron Lund is President and CEO of Bizwiz Consulting Group
Ltd., an international business analysis product developer
and vendor which performs consulting services in business
analysis, improvements and turnarounds in Calgary, Alberta,
Canada. Further information is available at www.bizwiz.ca.
byron@bizwiz.ca
Written By: Byron Murray Lund
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