Has there ever been a better time to plan for growth? Many businesses think of growth in terms of increased sales, but it’s also important to focus on how to maintain or improve your profitability. And looking internally for the answers can uncover some interesting insights.
Rather than talk about new value propositions for new sets of customers to drive growth you can also look internally to uncover some dynamic changes that you can do under your own roof. Here are 8 key metrics to consider, how can you implement them into your business.
1. Significantly change performance on key business metrics
Can your service level agreements change? Can your business operate new delivery and collection options? Can the way people operate and how you measure them change the ways they behave and their productivity?
Look at your board report and challenge the metrics that you measure your business on.
Utilisation of people, assets, investments, premises, distribution channels, cash, working capital, sales, return on marketing investment, employee retention, market share.
If your metrics are holding you back and making you make incrementally small improvements, find ways to throw in some big hairy goals.
The way you look at the things you measure can help you uncover new ways of doing business. Why not take the best in class from a wide selection of industries and rethink how you can achieve change to meet the same driving standards?
You might find the constraints that you thought were holding you back are no longer there and your inability to change has just been the way people think and behave and actually don’t really exist. You can be more proactive in aligning your business model with what your customers really care about.
2. Improve your cash flow velocity
The higher your cash-flow velocity (the speed money comes in and goes out your business), the less working capital you need, and the more effectively you can use your assets.
- Eliminate or reduce stock and working capital?
- Change your payment terms to others?
- Speed-up payments from customers?
- Generate cash before you have to incur costs?
- Change your customers’ buying cycles?
- Increase the payment frequency of a contract? Or can you charge in advance?
- Automate so manual delays don’t hold up cash receipts?
- Offer customers electronic-payment options to speed them up?
- Request up front payments or payments in advance of services?
- Outsource or insource?
3. Improve your customers’ cash-flow
How about in your business model review you also look at how your customers can improve their cash flow.
If you can also improve customers’ cash-flow velocity, so much the better.
4. Improve your customers’ performance
A value proposition states that customer satisfaction minus price equals customer value. Can you:
- Increase savings to protect your margins?
- Add soft benefits to drive real value? For example: free assessments, new reporting methods?
- Boost their productivity?
- Find out what your customer metrics are and match your business model to assist?
- Help customers identify their drivers?
- Work at the same pace as your customer – so they have less waste and more value?
The fact that Ryanair has such a fast turnaround means you know that the gate isn’t even called until 40-45 minutes before take-off time, so you needn’t get to the gate until 20 minutes before the flight (You have a seat number, why do people queue for these flights?). Their business model gives the passenger a productivity boost.
The full inside for business travel by the way would be: park in the short stay booked at least 4 weeks in advance (2-5 minute walk), buy a priority lane security pass for as little as £3.50 in advance, and travel hand luggage only and you can often do the whole airport arrival to departure in 45 minutes. But please make your own plans for travel as this is an example and we can’t be responsible for things that might go wrong.
- That’s improving customer performance.
5. Improve your asset utilisation
- Reduce asset intensity by outsourcing?
- Own or co-own assets or access them differently?
- Use the cloud instead of on premise servers?
- Mobilise your workforce and optimise travel times?
- Use assets more by extending usage or changing how you use them?
- Pool your assets with others inside and outside your company?
- Change fixed assets to variable assets by, for instance, establishing utilisation contracts with suppliers for certain services?
6. Improve your customers’ asset utilisation.
- Reduce customers’ assets?
- Help customers use assets more productively?
- Help customers reduce their fixed-asset burden by taking on their assets and charging them for usage?
7. Create flexible pay as you use technologies
Just an idea. How much time is spent at your company managing technology? With the advent of cloud computing, you often don’t need any on-premise servers and IT equipment – just a robust, fast broadband connection.
Convert your processes to take place anywhere, anytime and unleash your workforce to being totally flexible.
There is a reduced need for IT staff as issues can be dealt with by users talking directly to the service provider (Email, CRM, marketing, finance, data storage etc).
8. Freelance and interims and outsourcing
According to Vistage speaker Jeff Grout: “These days professional interim managers and directors are not people who can’t get jobs or who have been made redundant. You can get seriously experienced and skilled people to fill skills gaps quickly and to introduce new value to the business easily.”
Finance directors can be outsourced to companies like the FD Centre, who can plug in experience on a part-time basis.
Freelancers and contractors can provide scale, but they can also work in the short term for you to manage growth and change over periods of 1-6 months while you measure how much resource you really need.
Here are just a few ideas. We’d be happy to grow the list. Please add your own ideas and comments in the form below – we’ll be happy to share them.