how to multiply profits

HOW TO MULTIPLY PROFITSHOW TO MULTIPLY PROFITSBy Profit-Minded CEOs from various companies; Vision Books; New Delhi, 2005

While there are many

books w r i t t en abou t

succeeding in business,

very few of these are

actually written by business

executives, or people who

actually run successful

bus inesses. How To

Multiply Profits is different

because it was written by

real business leaders from

some of the world's most

respected companies.

Thus, the book offers real

world insights, perspectives

and advice on the most

impo r tan t i s sues f o r

success from accomplished

professionals who know

what they are talking about.

I t p r o v i d e s a r a r e

opportunity to learn from

the best in industry and

become an expert yourself

on creating a successful

business.

read the summaryread the summary

Inside This Book Summary:Inside This Book Summary:

The Big Idea

Creating a Strategic Vision to Achieve Profits

Finding Your Profit Centers and Creating New

Ones

Crucial Leadership Strategies

Use Technology

Manage Expenses

Handling Risk Effectively

Staying Out In FrontB

Published by BusinessSummaries, 3001-91, 11010 NW 30th St., Suite 104, Miami, Florida 33172 2007

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Tips from the CEOs On Making Profits

are facing pricing pressures. One strategy to

face this challenge effectively is to find your

profit centers.

This is not easy. You can do this by first holding

a strategic workshop with all the key leaders in

your company and undertake a SWOT analysis

(Strengths, Weaknesses, Opportunities,

Threats) of your company and your

competitors. Next, talk to other people friends

in the industry, suppliers, competitors, trade

journals and get their opinions on the industry.

In short, by knowing your company, your

industry and your market, you will be able to

discover a great new source of profits.

The best way to find your profit centers is

through customer feedback. A good tactic in

getting the right kind of feedback is to go to the

top twenty per cent of your customer base and

ask them some of these questions:

Why do you do business with our

company?

How did you first come into contact with

our company?

Why did you first decide to do business

with us?

Why do you continue to do business with

us?

What do we do better than anyone else?

What do we do well? What do we do

poorly?

What other products, services, or

solutions would you like to see us add to

our offerings?

The answers to these questions will point you

toward the real profit centers of your business.

Yet another source for new profit centers is new

markets. To discover these new markets, think

laterally to expand your customer base. First,

look at your customer base and the problems

that you have solved for them. Then, have your

team consider what other kinds of businesses

have similar problems, and then try to solve

those problems for these new customers.

Author: Profit-Minded CEOs

Publisher: Vision Books

Date of Publication: 2005

ISBN: 81-7094-625-5

Number of Pages: 152 pages

Change is something inevitable. There are

changes we create and changes that simply

happen to us. With this reality, the best way to

manage the future is to be proactive and create

it yourself.

This entails identifying clear goals for success,

outlining a plan for execution, and challenging,

empowering and developing your people.

The key to building a business is to begin with a

well-articulated strategic vision. Often this can

be said in a few words, but these words will be

the basis of all that follows. For example, two

entrepreneurs may decide to go into the dry

cleaning business. But while one may seek to

provide the best quality service, the other may

envision to offer the lowest prices possible. This

will take these two entrepreneurs down two

different roads of doing business.

Establish a clear business philosophy founded

on values of honesty, integrity, and open

communication throughout the company, as

well as concern, consideration and fair

treatment for customers, partners, and

employees.

Business in America is becoming increasingly

more competitive, and most business owners

BusinessSummaries.com

About the Book:About the Book:

2 of 62 of 6

Creating a Strategic Vision to Achieve ProfitsCreating a Strategic Vision to Achieve Profits

Finding Your Profit Centers and

Creating New Ones

Finding Your Profit Centers and

Creating New Ones

How to Multuply Profits by Profit-Minded CEOs How to Multuply Profits by Profit-Minded CEOs

Maintaining Your Profit Centers

Also remember that you should keep your

focus on main profit centers, and ensure that

they remain consistently profitable. This is

equivalent to knowing what you do well, and

sticking to it. Stay close to your core areas of

business and maintain a consistent focus.

Maximize the profitability of existing products

and services through repackaging or

redistribution.

Then you can invest in new products and

services that complement your core offerings.

This is also key to creating new profit centers.

For example, training, customization and

consulting services may be made available for

software developers along with the software

products.

Finding New Profit Centers Across The

Globe

The task of finding new profit centers for a

company depends on the nature of the

company and its products and services. And

many companies will find that their main profit

centers are geographical in nature.

Focusing on geography to identity and create

new profit centers entails establishing your

company as a global player (you can use the

Internet to do this).

New profit centers result from the ability to

enter and open new geographical markets.

Find new regions by first identifying a good

partner to test the market for you. Then, when

the market proves itself, you can either acquire

the partner, or set up your own operation.

The most important success factors for

establishing profit centers and becoming a truly

global company are:

Appearing local to each country or region

by speaking their language, dealing in their

currency, following their business norms

and customs, and providing them support

locally.

Offering a global product or service that

will be in demand regardless of the country

or region.

Leveraging resources from across the

globe in a seamless manner to help solve

local problems.

Creating a realization among customers

and prospects that they are not alone in using

the product or services of the company. Many

customers throughout the world are using the

same. Strength and comfort lies in diversity

and in numbers.

First, you need to trust your instincts. If something

doesn't feel right to you, such as making an

expensive purchase or hiring a new employee,

then call on your experience and gut instinct to

make the right decision.

Second, learn how to delegate instead of trying to

do everything yourself. This entails trusting the

people around you; a business will never grow

without the collaborative contribution of the

people that make up the company.

Third, while it's often said that no one is

irreplaceable, it's critical that you grow and mature

key management positions.

Also, to be a good business leader, you need to

know what your customer wants. Attention to the

customer is the true gauge of management

success.

Know your limitations. This means knowing and

embracing the things that you are not good at, and

identifying the people who can do them best and

putting them in the best position to do the job.

Be passionate and creative. If you are not

passionate about what you are doing, chances

are you will fail. Passion also releases your

creativity.

Be positive. In business, you have to believe in the

possibilities to have a successful plan for the

future.


3 of 63 of 6

First: Believe in PeopleFirst: Believe in People


Use technology in every subsection of the

company. Consider automation processes and

knowledge management systems that can

make information sharing easier. Invest in the

right critical technologies (such as the right Killer

App also known as a critical business software

application to manage your business workflow)

that will provide a definite return on investment

and allow you to scale and maximize profits.

Use the Internet to make a global reach. The

Internet is a tool to make the presence of the

company felt, and it's also a vital resource for

marketing, customer support and collaboration.

Use Internet-based conferencing solutions such

as Placeware to reduce rising travel cost and

save time.

Only use proven technology. Don't invest in all

the latest gizmos and software. Be wary of new

technology that doesn't actually save time or

provide a way to be more cost-efficient. Don't

adopt technology for technology's sake.

Reduce overhead and other expenses where

you can. It may not be possible to raise profits by

even 10% in the short-term, but you can still cut

expenditures very quickly. Renegotiate your

lease, for example. Think pruning, and profits

eventually rise to the surface.

Selling, general and administrative expense

should always grow more slowly than revenue.

Strong ties between staff and line people are the

keys to this. Build this through shared goals and

frequent communications. Identify short- and

long- term goals for reducing expenses.

If your overhead is growing faster than your

revenue, then you are probably building for the

future, which is often a bad idea. Buy only what

you need right now; never build for the future

because the future may not happen. Many

companies have gone out of business by

spending on capacity, space or people for a future

growth that never materialized. The trick here is to

always live within your means.

Truly understand your cost structure and how it

will be affected by planned growth. This means

looking at your cost per unit and how they will be

affected by investments, and other changes.

Cutting Corners

When you really need to reduce expenses, there

are some strategies you can employ. One, you

can reduce all non-essential marketing programs

because these have the most intangible return on

investment.

Another way of reducing expenses is to outsource

some of the non-essential functions within the

company. Deferring new hires or reducing travel

expenses are other temporary fixes.

Risk assessment is all about potential return.

First, the potential return needs to be significantly

higher than the cost of failure. Second, you need

to determine if the application or project is within

the core expertise of the company. If so, then the

odds of failure are low, and if not, then the

potential return better be significant, or it should

not even be considered.

Ask yourself three questions when assessing

new risks:

What is the possible return on investment

and is it worth the gamble?

Can we actually afford to take the risk?

Can we afford not to take the risk?

Vigilance is required for keeping an edge and

remaining profitable in any industry. You can do

this through education. Read constantly. Keep up

to date about the trends and other development in

your industry. In addition to reading broadly, it's

important to listen. Listen to your customers,

supplier, employees and competitors.


4 of 64 of 6

Use Technology Use Technology

Manage ExpensesManage Expenses

Handling Risk EffectivelyHandling Risk Effectively

Staying Out In FrontStaying Out In Front


Also, fear can be a healthy thing. Remember

that the competitor you should be worried

about may not even be on your radar screen

today.

Don't be afraid of experimenting and of failure.

From failure comes knowledge and experience

which will lead to your next success.

Always learn from your mistakes. Never make

the same mistake twice. If necessary, write

down the mistake and what you learned from it

and share it with your managers and

employees if appropriate.

Figure out what makes money, what you are

passionate about, and most importantly, what

are the things in which you think you can be the

best in the world.

Build value on a foundation of values. This

means instilling and demonstrating integrity,

passion, knowledge, fairness, and trust. As a

leader, you must show concern for employees,

the environment and the community at large.

Look for superior people who also believe in

the company and can contribute to it.

At the same time, empowering people and

encouraging entrepreneurial freedom does not

work without a system of control that monitors

performance, rewards excellent performance,

and corrects unacceptable performance.

Incentive compensation is a substantial portion

of total compensation for key people. It should

be structured to align corporate and individual

objectives.

Tips on expanding and sustaining business

success:

Growth is crucial to maintaining a

successful business so expand existing

business segments, differentiate products

and services, and constantly improve

technology.

Evaluate no profit centers and

opportunities by looking at margin,

intellectual property, distribution channel and

return-on-investment.

Protect your unique products through

patents because patents provide a significant

barrier-to-entry to competitors.

Periodically evaluate existing product lines

to assess changes in the market place,

technology, demand, and customer

preferences.

Conduct financial analysis to manage risks

well. Risk can range from insignificant

investment to 'betting the farm.' Consider both

strategic benefit (such as acquisition of

intellectual property or maintenance of

margins) as well as strategic risk (another

company making the acquisition)

Spend to benefit business, especially for

research and development and patents, as

these are the lifeblood of future growth and

success.

To maintain your edge and stay profitable,

constantly analyze your business get good

data on your sales, products, areas of

operation, markets, and customers.

Know your customers. Talk to them, make

sure you know what they need and provide

these. Include customers in the production

process to make sure you come up with

products that will sell.

Three guiding rules for increasing profits:

Work to align the interests of all of the people

involved with your company stakeholders,

employees, business partners, customers,

vendors, and the community in which the

company is located.

Approach each endeavor with a strong work

ethic. Nothing replaces hard work.

Strictly adhere to a consistently applied

business process. It can be as simple as:

make a plan, clearly communicate the plan,

monitor results, and react to them with

changes as necessary.

Golden Rules of Success:

Understand and watch the numbers

Continuously seek for improvement in the

area of customer service. Remember that

profits come from serving customers better


5 of 65 of 6

Tips from the CEOs On Making Profits Tips from the CEOs On Making Profits



than the competition. And customers make

buying decisions based on their perception

of value and great experiences, not just on

prices.

Always look for niches and other services

that you provide that deliver higher

margins.

Quick Fixes for Increasing Profits

Reduce overhead. It may not be possible

to raise profits by even 10% in the short-

term, but you can still cut expenditures very

quickly. Renegotiate your lease, for

example. Think pruning, and profits

eventually rise to the surface.

Existing customer promotions. Find a

new or existing product that a large portion

of your customer base is not buying and

then give them a short-term incentive to

buy it.

Slight price increases. Try raising prices

slightly in some areas; a 3-5% increase is

usually palatable to customers. Implement

an additional level of service to soften the

delivery.

Market penetration. Add sales people and

focus them on deeper market penetration

in the products or services in which the

company has the most expertise.

Reach out to customers by offering

referral fees and discounts to those that act

as references for their industry peers and

trading partners.

Use technology in every subsection of the

company. Consider automation processes

and knowledge management systems that

can make information sharing easier.

Insider Tips for Remaining Profitable

Increasing profits means always looking

at your costs, ensuring they don't increase

along with inflation. One way to do this is to

reorganize to allow sharing of back office

and administrative resources.

Make sure that you have documented

quality processes that allow new employees

to be trained quickly; this will ensure that you

have a profitable business throughout the

years

Try out new ideas and make sure you

reward new endeavors, even if they are not

huge successes.

Top-grade your organization and make

sure you have A-players that are on top of

their game, and then continue to challenge

them.

Make sure you always have good

reputation with your customers. Do

whatever it takes to keep this relationship

solid.

The Three Tenets of Making Profits

Maintain a double-digit revenue growth

rate. Revenue is the great enabler for

performance improvement.

Manage job margins at current levels.

Consistently review all jobs to make sure

you are maintaining margins at all times.

Awareness of individual job margins helps

identify trouble spots and develop solutions

to such problems.

Capitalize on the inherent operating

leverage of the business. This means

making sure that selling, general and

administrative expenses grow at a slower

rate than sales.

6 of 66 of 6How to Multuply Profits by Profit-Minded CEOs How to Multuply Profits by Profit-Minded CEOs

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