One challenge that I have with every leader that I meet, regardless of their level of success, is to respectfully help them understand where the leaks are in their business. Every company has leaks. These "leaks" are the aspects of the business that are not running optimally or efficiently. The challenge for most leaders, especially entrepreneurs, is the processes that they use to lead and manage the business are broken and this causes them not to properly identify, discuss, and address opportunities for growth, profit and productivity. These leaks are often much larger than they realize.
The Leaky Bucket Principle
As a visual, I like to refer to this as the Leaky Bucket Principle, as all companies have leaky buckets. One of the reasons I hated accounting was that I noticed that you could do a great job of getting debits and credits correct and still go out of business. It frustrates me that there is no financial statement where an owner can see the many things a business fails to do correctly and more importantly they are not capturing their leaks. Areas where they are losing money. Many times those numbers are much bigger than the numbers they are capturing. Over time these can add up to big numbers, and there is no way to track them.
For example, I met with a company this week that did over $200 million quotes last year, but only $16 million in revenue. Now the real question is how many of those quotes could they have had once we close all of their leaks because of pricing mistakes, broken relationships, and other issues that could be addressed by the company?
Is your business running at peak performance?
Have you identified where the potential leaks are in your business bucket? The first step toward increasing your business success is to accurately identify the "leaks" and to work toward patching the places where your profits are not fully being captured.
Here, we identify 8 of the Leaks that are potentially detrimental to your business results.
The following are some common leaks that I find in most companies:
Lost productivity in B and C Players:
Your internal processes do not properly identify B and C performers and even when you identify them it takes too long to take action. You classify people as "A Players" for the wrong reasons and the real "A Players" quit, get fired, or are not engaged anymore.
By allowing poor leadership you are deciding the leader has more to offer than everyone else put together... a fools bet. Your poor leader causes everyone around them to perform at lower levels and you lose access to a lot of great ideas and people are less apt to willingly give extra effort.
Tactics instead of strategy:
Organizations are losing lots of time and energy zig zagging and starting and stopping because there is not enough thought given up front to desired outcomes and best paths to getting them.
Lost performance to unfilled positions or underinvestment in functions:
Most organizations are so caught up on what a position costs them that lose big opportunities. Existing people are getting burned out and current efforts are not done well because people are spread too thin.
How much does it cost you to find each new person, how long does it take you to rebuild that institutional knowledge, what impact does this have on customers, what impact does it have on the overall flow of the organizations, how does it affect productivity, how much time does it take to train someone, how does it affect the trainers productivity, and if you add it all up what is turnover costing your company every year?
How many deals did you fail to win because of a bad strategy? How many opportunities do you not have an opportunity to quote and would have won but the prospect had no idea your firm existed? How many opportunities did you lose because your sales processes are broken?
How many customers did you lose because you fail to be provide value that is meaningful enough for them to stay loyal. How many customers did you lose because there is no one person in monitoring, managing and leading the overall customer experience to making sure that it is consistently high?
Increased cost from mistakes:
How closely are you measure the 5 to 7 processes that drive your business? What leading indicators do you use to tell you that they are all functioning at optimal levels?
One of the first steps toward increasing your business success is to identify where your leaks are in your business. If you are interested in a business assessment, let's schedule a time to further discuss your business "leaks" and how we might work together to patch up your leaky bucket. Call us for a FREE consultation 1.877.692.6211
By Howard Shore