...nothing is as it seems…
The language of business is numbers, a business can look good, feel good and even taste good; but unless the numbers are right – you won’t have a business, you’ll just have a very expensive hobby…
My challenge
and opportunity therefore is to make your business numbers as compelling and
exciting as the passion you have for every other aspect of your life; so here
goes…
Here are my 7 Contradictions that will help you become truly successful...
Contradiction 1 – Profit is not your Objective.
Your
objective is to build your business to achieve what you want. Once you are
clear on exactly why you are in
business, we can make a plan. Now while of course you need to make a profit in
your business, profit is simply a barometer that lets you know how you are
doing, your focus and attention should be on the causes of profit – your objective is to understand what causes
profit in your business and manage them so that you can achieve your why.
Profit is your Objective when you know why, and how to
generate it…
Contradiction 2 – Cash is not King.
Cash will
produce approximately nothing while it is sat in your account, it will make you
feel good and able to sleep at night, but that is all. Cash should be invested
in assets and resources that give you a return. For example, the only reason
you should pay a wage is because you get a better return on the investment than
leaving it in the bank or trading on the markets. It is how you invest your
cash that is King, not how you store it. When your cash actually works for you,
you will make sure you collect all that is due on time, every time – it will be
really expensive when you don’t…
Cash is King when it is invested well…
Contradiction 3 – Growth is not Good.
Plenty of
profitable businesses close down because they simply grow too fast, they cannot
keep pace with the investment required. Imagine a business with revenues of £5
million in 2009 that grows steadily so it achieves total revenue of £6 million
in 2010. That’s just a 20% increase; but if in January 2010 the sales were
around £420k (about 1/12 of the £5 million), to achieve £6 million during the
year, assuming steady growth, the sales in December 2010 would need to be
around £600k – compared to January that is a change of 42%, not 20% and even if
growth stops there – the business will have a running rate of £600k per month,
or £7.2 million a year – growing a massive 71%.. Understanding the implications of growth is fundamental to
your success – 20% growth = 71% bigger…
Growth is good, only when it is managed and understood…
Contradiction 4 – Big Contracts are Bad.
I have a rule
that in any of my companies, one client should represent no more than 10% of my
profits. Winning a big contract looks very attractive, especially when you are
going for growth – they can be the worst thing that happens to a business. Watch
out for tight margins, extended payment terms, and queries raised on your
invoices from eager employees’ in their Purchase ledger department. If you do
go for a big contract, make sure you keep marketing to find others that will
dilute their control over you – don’t allow a customer to have more control
over your business than your shareholders…
Big Contracts are great when they contribute to your
business not overwhelm it…
Contradiction 5 – Avoid Discounting.
Never ever
discount your prices – and don’t be fooled by Manufacturers Recommended Retail
Prices either… If you make 50% gross profit on an item, and you offer a
discount of 25% you will instantly cut your profits in half on every sale. This
means that in order to get a benefit from the offer you have got to sell more
than twice the amount you would have done at the full price – sounds like
working harder to stand still to me… If you put your prices up by 10% on the
same item – you could afford to sell fewer and still make the same profit –
there are always choices when it comes to pricing, and maintaining your margins
is the art of a successful business.
Pricing is the essence of your success – protect your
margins wherever possible…
Contradiction 6 – Overheads are Good.
Very few people
build a great business by simply cutting costs. Your overheads are usually made
up of the salaries and wages of your team, premises costs and other operational
necessities. They are not overheads when they all give you a positive return on
your investment – see Contradiction 2. When every team member gives you a
positive return, you can hire as many as you like, when you pay rent for a
great location that generates business for you, open more branches in similar
locations. Every line of overhead should be viewed as an investment from which
you need to get a return – your insurance broker should pass you referrals, so
should your bank and telephone provider. When every overhead is truly working
for your business – overheads are indeed good.
Overheads are bad – only when they are out of control…
Contradiction 7 – Accounts is boring.
I love
looking at my accounts – now you may say that I need to get out more, but once
we understand our business, we can actually start to enjoy looking at how our
business is doing. Your accounts should be regular, monthly for the full management accounts but have
daily and weekly numbers prepared that will show you what is happening. Select
a range of indicators that will let you know how everything and everyone is
performing. Marketing, service and operations should all have measures and
performance targets to achieve – that will mean when you look at the accounts
you will be pleasantly surprised and not unduly shocked.
Accounts are exciting when they tell you good news...
David is one of the most experienced Coaches in the world. Following a successful career in Engineering, Logistics and Aviation Services as Manager, Director, CEO and Business Owner in the UK, David began his International Business Coaching Career in 2003.
Having now worked with clients in 23 Countries, published over 40 Books on Business and Personal Development and shared the stage with some of the top names in the business, he is highly qualified to deliver unique programs and content to the benefit of his international clients.
David created Results Rules OK as a leading provider of Business & Executive Coaching Programs and brings together all his experience as a Manager, Business Owner and Entrepreneur to deliver a range of Programs that are all designed with a single objective Client Results…
How to contact David Holland MBA
Telephone – France Mobile –
“David started working with our group of companies at the end of 2012 in order to help us construct and implement a coherent business plan. He works with us rather than for us and together we have been able to increase our business footprint by over 50%.”
“I have worked with David for the last five years; he does what it says on the tin and gets results. Which to me means creating more profit through increasing my business effectiveness and directing my effort and energy to gain optimum returns."
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