A3.0 Redouble Your Profit in a Year
The second of our signature Profit Savvy programs is Redouble your Profit in One Year. This program builds on the rapid optimisation of our Double Your Profit in 100 Days program that shows how a quick optimisation of your existing business can literally double your profit in 100 days.
To get this second doubling of your profit, we discuss how to increase your revenue so that more money goes to your profit bottom line. Since this is a slower process, we will allow ourselves 12 months to achieve it. Nevertheless, these two combined are likely to more than quadruple the profit of your business in just 15 months.
The techniques discussed in DP365 are designed for growth businesses. They might be a relaunch of an existing business or a startup.
For convenience, we are going to call this Redouble Your Revenue to Double Your Profit in One Year (DP365). It is the big brother of our earlier Double Your Profit in 100 Days (DP100).
Our goal here is to develop an approach to your business that will double the revenue through the business in just one year. However, our ultimate goal is to increase your profit rather than necessarily just increase the amount of money coming in. Greater revenue without greater profit is a valueless exercise.
In fact, if you can double your revenue and maintain the same level of efficiency that you have developed in our DP100 module, you are likely to more than double your profit. Many of your fixed costs will remain the same and therefore more of your Gross Profit will go to your bottom line. Our minimum goal in DP365 is to achieve a 4 times improvement in Profit in the combined 15 months of the two Double Profit programs.
In Profit Savvy tradition, this is a Menu of Menus. To avoid re-writing material that you might use throughout this article, we draw your attention to it at various points and add direct links. Often, even if you think you are quite familiar with the material, a speed read may open your mind to new interpretations now that you are looking at them in a different context.
We suggest you use this article as your starting point for the process over the year and them jump off from it to the more specific material on the particular issues you are interested in at the time.
Three Stages to Doubling Profit
We have broken this year long process into three stages which we call; Get Ready, Get Set and Go.
There are a few decisions for you to make when about to set out on this journey.
Basically, they can be distilled down to:
- Set the Goals for the year. We have started with a Goal of Double Revenue and Double Profit. However, you might feel that is more ambitious than you want to be or, alternatively, not ambitious enough. We will walk through a goal setting exercise so that you end up comfortable with there you are going in the year.
- Reality check on whether your Goal is even possible. The Theory of Constraints tells us that there is usually just a few constraints preventing growth. The problem is, some of them might be serious. For example, your constraint might be that you don’t have any money. Or it might be that you are a factory and there is no way to get more throughput from your production line so you can’t produce more to sell to increase your revenue. This step identifies these constraints and a process for overcoming them.
- Recheck the achievable goals after you have relaxed the problems identified in step 2 - Reality check.
- Once you reach this point you will have made a decision on what your goals are for this year of DP365 and are ready to go to the next step
You can branch off here to read more about this step or read though this article in full then come back to this stage (Link to “Get Ready” article).
Having got clearly in your mind the goal for this 12 month project, and satisfied yourself with a reality check that it is potentially achievable, we will move onto some of the steps that need to happen before you actually launch into the Go part of the exercise.
We are going to make the assumption that you have already done DP100. DP100 optimises what you are already doing. It makes common sense that you should optimise what you are already doing rather than try to grow a business that has some inefficiencies in it. Otherwise, the inefficiencies will get bigger along with the rest of the business. It also means that you will have a better understanding of the various drivers of the profitability of the business that you can now use in this growth phase. Therefore, if you haven't already done DP100 we strongly encourage you to do so.
We have set ourselves a goal to double revenue in 12 months. There are very many alternative paths to how we get to this particular "destination". The most common way is for a businesses to press the foot on the accelerator to the floor boards and go for it as best they can. In a discussion here, we hope to demonstrate that this is not a very productive approach and that a carefully considered and well managed spiralling up from where you are now to a growth goal is far better than uncoordinated growth efforts on many fronts within your business.
Without doubt, your staff will have a major impact on this DP365 project.
Until such time as you have your staff on board for what you propose, your whole DP365 project is going to be at risk and at best more stressful than it needs to be. Therefore, we spend time in this stage talking about the people side of getting ready.
Lastly, having decided to have a carefully managed upward spiral in our growth plan, we need to develop a methodology for designing, controlling and measuring that spiral, we will spend time discussing the development of tools to assist with that.
You can branch off here to read more about this step or read through this article in full then come back to this stage (Link to “Get Set” article).
In this stage of the DP365 program we set out to develop an incremental process for implementing your growth plans so that they execute as quickly as possible and with as minimum fuss and bother. They also need to take into consideration your previously identified constraints such as capital and production capability in your system.
In this phase we spend time developing a process that can be replicated.
It will be immediately clear to you that any growth strategy needs to move forward on multiple fronts.
By way of listing a few, consider that co-ordinated progress will need to be made on most, if not all, of the following more or less simultaneously:
- Manufacturing systems.
- Support services like Accounts, IT and HR.
We will be using the Kaizen technique of "Incremental improvement” (link to Kaizen Leads to Continuous Incremental Improvement) as an upward moving spiral of improvement keeping all the several fronts moving forward in unison.
Central to the process is the Knowledgebase in Profit Savvy which is structured under major headings.
As you come to grappling with how to progress with any of the particular elements of your business growth, search for the structured information on that particular topic in the Profit Savvy Knowledgebase.
You can branch off here to read more about this step or read though this article in full then come back to this stage (link to “Go” article)
With each of these preliminary stages, we assign some “homework” for you to do if you are serious about growing your profit.
Your first time through these articles will likely be a bit of a scoping mission. You just want to see what’s here.
We hope that the approach gets you excited enough to pass through it a second time and do the “homework” that you skipped over on the first pass.
That “homework” will help you arrive at one of several conclusions:
- My business can grow and I am ready to have a go.
- My present business will struggle to grow so I should think about a pivot to incorporate other businesses or a particular specialisation within my existing business that is more capable of growth.
- Now that I think about it, growth is not really my thing. I would be happy to get my existing business as profitable as possible at about the size it is now.
No matter which of these you decide to do, Profit Savvy has a wealth of resources in its Knowledgebase on how to progress your business towards your goals.
If you look at this effort as a chore, or think it looks like a lot of work, you may lose drive and confidence from time to time. You might even give up.
We suggest you think of growing your profit as a hobby. You will be frustrated by your hobby from time to time but the enjoyment exceeds the pain. It can be the same with your business.
Even if you have a lot of staff around you, as one of the leaders of this makeover, it is really only going to be as good as you are. Just like playing golf, the trombone or portrait painting! And just as satisfying when you get it right.
Make DP365 a hobby and enjoy!
Where To From Here
To make the DP365 material more digestible, we have linked from this Menu to bite size pieces of information that you can work through in a fairly short period of time and then return to this Master Menu of activities to move onto the next stage.
As we do not know your business and its environment, we can only offer general advice on what might assist you to grow the profit for the business you presently have. You should always seek professional advice on specific matters only discussed in general terms here.