(Time to read this Blog is about 4 minutes)

Before we get to the main topic, here are a few things to get you thinking or smiling:

1. My Biz Quote of the week:
   “Choosing the comfort, simplicity and adrenaline rush of working ‘IN’ the business, rather than embracing the challenge and complexity of working ‘ON’ the business, is one of the most common and costly mistakes an owner or manager can make.”      
   …Donald Cooper.
    
2. Quick Biz Tip:
   Do any of your policies tick off customers?
    
   The daily newspaper business is tough.  In fact, it’s dying. So, why would Post Media, Canada’s largest newspaper chain, tick off their loyal home delivery customers by sending out this new policy? “Starting on August 1st, if you pause home delivery, we will continue to charge you for the first 14 calendar days, or for the duration of the pause, whichever is shorter.”
    
   So, here’s the question for you.  Are you doing anything that confuses, frustrates or ticks off your customers?  This is a good topic to discuss with your front-line people.  They know, because they’re the ones who take the flack from customers.  You’ll be surprised by what you learn.
    
3. Fun fact. Amazon currently has one million robots working in its warehouses…and 1.5 million humans.  It’s predicted that the robots will soon outnumber their human workers.  What are you doing to create world-class operating efficiency in every part of your business?
    
4. What’s hurting the bottom line in your business? According to Bloomberg News, Ford’s Electric Vehicle Division will lose $5.9 billion this year.  That’s more than $100,000 for every electric car it sells.  Ford’s cumulative losses in its EV Division will total nearly $18 billion by the end of the year.
    
   So, what products or services, branches or locations, process inefficiencies, non-performers and lack of accountability are hurting your bottom line…and what are you doing to fix it? 
    
5. AI update. We keep hearing that AI will change or affect almost everything we do in business.  But most of the business owners and managers I speak with have very little understanding of  what this really means…and how to go embrace AI.  Here’s how AI is helping some companies with Product Development:
    
   1. Market Analysis & Insights: AI guides product innovation by analyzing large datasets to identify trends, consumer preferences, and unmet needs.
   2. Design Optimization: AI-driven machinery assists in creating and testing product prototypes, optimizing aesthetics, features and functionality more efficiently.
   3. Customer Feedback & Sentiment Analysis: AI processes reviews, social media, and survey data to understand customer opinions, guiding improvements.
   4. Accelerated Prototyping: Generative AI can generate design options or simulate product behavior, reducing development time.
   5. Predictive Analytics: AI forecasts demand, market success, and potential issues, helping prioritize features and reduce risks.

Now, to this week’s important topic:

Some ‘straight talk’ about the math of profitability:

Most businesses, including some very large ones, simply do not understand the math of profitability….and it’s hurting them badly.  They don’t understand that small improvements in pricing, sales and efficiency will have a huge impact on their bottom line. Their accountants don’t even understand this important stuff.  Shame on them!

So, here, in the form of 3 questions is some ‘straight talk’ about the math of profitability. The numbers I’m showing below are averages, You need to do the specific math for your business …but you will be amazed at what you discover.  

1. What would be the bottom-line impact of increasing your prices by just 5%? In most business, a 5% price increase could improve the bottom line by 50% to 80%.  Are you so good at what you do that nobody would even notice, or care if you increased prices by just 5%?  Is your total value and customer experience so compelling that price isn’t as big an issue as you think it is?  If you’re not that good, what 3 or 4 things do you need to do spectacularly well to become that good…and when will you start?  No other single action in your business will grow your bottom line as much as this. 
    
   If 5% price increase is too much, what about 3%…or 2%?  What’s holding you back from doing this?  Is it that you’re mediocre?  Is it that you think it’s all about price when it’s actually about compelling value and extraordinary experiences?  Or, do you just have an entitlement problem that’s holding you back and hurting your bottom line?  Price resistance is often between our own ears…and not in the marketplace.  Nobody will ever think you’re worth more than you do.  Funny how that works!
    
2. What will be the bottom-line impact of increasing sales by just 5%, as long as you don’t blow your brains out with reckless discounting, couponing or extravagant advertising expenses to achieve that increase?  In most businesses, just 5% more sales, properly managed, will improve the bottom line by 25% to 40%.
    
   What 3 or 4 things can you do spectacularly well that would turn customers into ‘fans’ who will help boost sales by 5% simply by telling others about you? Remember, customers give you business…’fans’ help you grow your business.  How might you improve your sales training, customer response times, merchandise selection or presentation, your policies, your website, or your value message in a way that will increase sales by 5%?
    
   Do you have a current customer database and do you proactively use it to inform, coach, add value and communicate in a way that builds relationships and grows sales?   

   Heck, why shoot for a sales increase of just 5%.  If you’re truly going to be that much better at what you do and how you treat customers, why not go for 10% more sales? By-the-way, the easiest way to increase sales by 10% to 15% in most businesses is to make sure that your existing customers know about all the ways that you can be helpful to them.  If you’re at all like the 100s of businesses that I’ve worked with over the years, 90% of your target customers are not aware of all the value you offer…and that’s your fault, not theirs.

3. How would reducing expenses by just 5% grow your bottom line?  In most businesses, a 5% reduction in expenses will improve the bottom line by 20% to 25%.
    
   What 3 or 4 things could you do to operate more efficiently in every part of your business, without diluting the customer experience or the employment experience for your team?  How could you work smarter?   How could you improve systems and processes to get it right the first time, every time?  Who are your top 10 product and services suppliers?  How could you negotiate with them for better prices, terms or offerings?   Ask everyone on your team how you can operate more efficiently.
    
   So, there they are…three approaches to improving profitability in your business.  Create ‘Idea Fests’ three times a year.  Each employee will be responsible to bring at least one idea to improve efficiency, operate more safely, add value or serve customers more wonderfully.  Your staff knows stuff and they hate it when you don’t ask.
    
   Now the question is what would be the impact on your bottom line if you could actually do all three of these things at the same time?   What reality checks, changed thinking, decisions, commitments and specific actions would that require?  And, if you could double or triple your bottom line next year…would it be worth it?
    
   One last thought.  For every decision you make and action that you commit to take, determine specifically what will be done, by whom, by when, at what cost, with what outcomes, measured how and rewarded how.  Document the commitments and then follow up.  The world is run by those who make specific commitments…and then follow up.

That’s it for this week…

Live brilliantly and be kind to each other!       

Donald Cooper 

Donald Cooper speaks and coaches internationally on management, marketing, and profitability.  He can be reached by email at donald@donaldcooper.com in Toronto, Canada.