SCORE column: Do you have a culture of sustainable profitability?
As a resource partner of the U.S. Small Business Administration, SCORE - which offers free business mentoring and education -- notes the organization has helped more than 11 million entrepreneurs through mentoring, workshops and educational resources since 1964. The nonprofit SCORE was previously known as the Service Corps of Retired Executives.
Our economy is coming back to life.
The coronavirus certainly has had a hard impact on so many businesses, especially small businesses. This is a good time to take a look at your company’s culture and verify that you have established a culture of profitability. Culture is your shared values, beliefs and how you will deal with people, both inside and outside the business. This applies to both for profit and nonprofits. I read somewhere that “Culture eats Strategic Plans for lunch every time.” I believe that; just as I believe in and do Strategic Planning.
The value of an organization is determined, in most cases, by the sustained, predictable growth in revenue and profits. In nonrofits the results can be measured in other ways. So what are the characteristics of a Culture of Profitability.
A focus on what you do best
The PIMS (Profit Impact of Market Strategy) program states a company can only be best at one thing — that is sales, rearch and development, marketing, or manufacturing. This may be how you best offer your customers and potential customers the benefits that put you above your competitors in your customer’s choice of suppliers.
Employees are on your team
They are engaged to build the company and increase profits. They see a significant WIIFM (What’s In It For Me). For example, fair and equitable treatment, good wages and benefits, a chance to grow professionally, be recognized and appreciated for performance and having stable employment. The fun of being on a winning team. When adding staff, they’re slow in hiring and fast in firing, disruptive employees do much damage. The key question before hiring is will this person fit in our team.
There is Transparency
There is openness, communication, and accountability. Management is best served by sharing the scorecard on a regular and timely basis. Employees want to know how their organization is doing. What are the big wins? What needs to be fixed and how can they help make that happen. What is the scorecard, what are the key measurements that management tracks.
There is a history of sustained growth in revenue and profits. Early in my career I joined a small company with revenues around $6 million. Profits were erratic. The owners hired a professional manager from a major business consulting organization. He told them he was going to achieve five years of 15% growth in revenue and profits and they would become wealthy. He did that and the stock price grew significantly. That company now has revenues over $1 billion. I was there when they hit $70 million. What a fun time that was.
I have been involved with many small businesses that wanted to grow. As a SCORE mentor, I have watched clients make great gains. In reflecting back, in every case there was a culture of sustainable profitability. Here is what I believe are the common characteristics of having a culture of profitability:
The owner wanted to grow the company. Profits are the lubricant that make things possible.
We had to take risks and the owner could accept the risk.
There had to be innovation, we learned to accept change.
It took a team, and as we grew, that team changed.
The team was committed and made personal sacrifices to make things happen. We avoided blame; we attacked the problem.
We had a written and shared business plan. Projects were documented and had milestones to achieve before going further.
We had fun and grew professionally.
As the leader of the business, you will set the culture of your organization. That culture will be known by your employees, customers, vendors, family, and community. Your leadership and success are important to us all. SCORE is here to help.
For more information about SCORE, contact Dick Jordan at 218-251-4413 or Richard.Jordan@scorevolunteer.org .