Since starting my own business a few years ago I have spoken to so many people about “profit” or lack of, many of them are busy but most are not maximising their potential when it comes to generating profit.
The Lucky Country
After nearly 50 years of economic prosperity apart from the odd blip (e.g. the recession we had to have) Australia has enjoyed an unprecedented degree of economic stability and earned the envy of much of the world.
The way the society (via the press) demean “Profit” is irresponsible, detrimental and disgraceful. Slagging off about the HUGE profits made by companies making no reference to the amount of investment or number of people they employ is wrong but it sells papers, generates uninformed debate and feeds our tall poppy syndrome.
A lack of investment in the development of frontline teams has created an environment of “cost plus” selling where sales people think 25% is a good trading margin (because overall it is 18%) when 35% or more could have been on the table.
This lack of awareness stifles profit growth via selling on price rather than value which it is the top of a very slippery slope.
These challenges for businesses specifically and society more generally has created an opportunity for good businesses to improve their overall financial literacy, not just in a limited number of functions.
More effective margin management has a huge impact on the bottom line in addition to improving the intestinal fortitude of frontline sales teams who can then begin to understand how much control they actually have.
The reality is that profitable (or healthy) companies give pay rises, increase bonuses, help with mortgages, feed our families and send us on holidays.
We all need to get better.