Meyer Samet: Five Steps to Profit Improvement After a Period of Economic Decline

Meyer H. Samet

Monday, November 17th, 2014

Samet Consulting has been helping  a wide variety of businesses improve profits since 1989.  For the owner operator let’s investigate the following  five areas for significant profit improvement. 

1. Sales Management – Compensation Plans:  Many owners revise their Incentive Plan to reduce the payout when one salesperson is too highly compensated.  Having written business plans for 40 years, the Sale Projection is always the most difficult to develop and accomplish.  If the  salesperson has a great year, determine how all can have even a better year next year by a better incentive plan that can pay more.

2. Sales Management – Staffing Evaluation:  Turnover in the Sales Department is the rule not the exception and often the owner does not ask the right question: Why?  The tenacity, interpersonal skills and persuasive acumen are not always apparent in a salesperson.  Personality testing, sales call team building and time  management training can effectively assist in improving sales performance. 

3. Sales Management – Quarterly or at least annual reviews that give the salesperson the attention and you the manager an opportunity to understand to know each other better.  No one comes to work to get fired and with that information the annual review can prevent the costly expense of turnover.

4. Organization Malaise – Down turns in the business model can permanently effect the company.  Small business owners that have to layoff personnel are often ashamed and depressed.  Company staff meetings stop, communication slows and annual reviews if they existed are forgotten.  Everyone know there is a problem, but now there is no forum to overcome the problems going forward.  Tap the greatest resource of your company “THE STAFF”. Weekly Staff Meetings

a. Quarterly Meeting: Share developments and ask for suggestions to help our customer and the company.

b. Outstanding performance recognition meetings:  Cost is minimal and moral can soar if used properly.

c. Birthday flowers, cards or any kind of recognition.  

5. Purchasing Agreements –   When is the last time you asked your supplier for a discount?  As your company recovers and volume returns as well as cash flow, inquire about new discount plans.  Go on the internet and google suppliers around the country.  Use this information to open a conversation with your suppliers locally.  It might be a conversation they have wanted for a long time but did not know how to start it.

6. Insurance:

a. Health Insurance:  Are your plans appropriate for your organization?  Send out a questionnaire asking each employee how the insurance plan in place works for them.  If you have employees  that are young and could earn below $30,000.00 there are government subsidies that need to be investigated.  Ignore politics, look at benefits vs. cost.

b. Building Insurance:  Replacement costs are so high at this time you might be buying insurance you do not need.  Look at your policy to determine  what level of coverage you have and whether prudence dictates lowering the coverage. If you have a 6,000 square foot building but would only rebuild a 4,000 square foot building if a disaster occurred, you might rethink your coverage.

c. Business Interruption Insurance:  Determine exactly what you are paying for, what you have to provide to get reimbursed and how long you have to wait.  If it is 90 days, a standard coverage arrangement. Do you have a backup plan for the 90 days?  Call your banker to discuss backup lines of credit or other options they might have. 

This is the tip of the Profit Improvement Iceberg.  Questioning all business assumptions is hard work and time consuming.  Start with these five areas and when you see the improvement you will be enthusiastic about expanding the program.