As a CPA, I often get asked about the state of the economy—more specifically, I’m asked about what’s going to happen in the future. The honest truth is that I don’t know. In fact, nobody knows. There’s no way to predict what’s going to happen in the future, especially when it comes to economics. This time two years ago, for example, nobody could have predicted the size, scale, and impact of COVID-19 on the world as we know it. With that in mind, there’s a very important point that I want to get across: No matter what the circumstances are, there are always opportunities to create a profit machine.
Did you know that during the Great Depression, the worst economic disaster in the history of the United States, 80% of people actually had a job and that many big businesses were able to successfully launch because of the sheer amount of people looking for work? A similar trend emerged during the crash of 2008. My point is this: You can create a profit machine any time you want—you just have to know how to do it.
With that in mind, I want to share with you some tips on how to create your own profit machine. If you follow these twelve guidelines, you’ll be able to create a smoothly-running profit machine no matter your circumstances.
Create a Profit Machine by Documenting Your Major Systems
I did this during my days working for Coca-Cola, and the results spoke for themselves. Before anything else, you’ll need to document the systems you have in place for your business. Go into as much detail as reasonably possible, and make sure you have a deep understanding of how they work. Developing this understanding will allow you to more easily make informed decisions going forward, and is absolutely essential to creating a smoothly-running profit machine.
Create a Special Action Project Team
Your Special Action Project Team’s only job will be to improve the efficiency of your systems. If you run a larger business, putting a team like this together will be less of a challenge. If you run a smaller business with fewer staff, however, this may be a little tougher. Keep in mind that your team doesn’t have to be big; you can even keep it down to two or three people. It doesn’t matter as long as they get results.
Ask Yourself the Right Questions
To put it bluntly: Question everything. You’re never going to learn how to create an effective profit machine if you don’t ask the right questions. What about your system doesn’t work? If your system does work, what about it makes it effective, and what could be improved? Running a business is a constant learning experience, and the best way to make the most of it is to be constantly asking questions. This will not only boost your profits but also make you a better entrepreneur.
Create a Profit Machine by Looking for a Working Model in a Similar Industry
Beyond looking at your own business, you should research the models of other businesses. No matter what kind of business you run, there’s a good chance that there are multiple similar businesses or there. A few of them may employ similar models to yours. If they work, take note: there’s nothing wrong with taking inspiration from processes that already work! There’s always more to learn, so don’t hesitate to start looking. You’d be surprised at how much you can add to your processes by learning from someone who did it all better.
Calculate Your Activity-Based Costs
I spoke about this concept recently. If you’re not familiar with Activity-Based Costing, you should do your research immediately. This is, quite literally, the “ABC’s” of business, and if you want to create a strong profit machine, knowing how to calculate these costs is absolutely essential. If you’re curious about ABC and want to learn more about it, you can learn more about it at the link here.
Eliminate Your Hiring Mistakes
Talent goes a long way, and when it comes to creating profit machines, it’s critical to get it right the first time. If you’re serious about boosting your profits, you’ll want to get very strict about the hiring process. Getting yourself a “superstar” is easier said than done, of course, but if you’re patient and willing to put your nose to the grindstone during the hiring process, this will make all the difference in the world. Hiring competent employees l gets your business running smoothly from the start, not just because they’re good for business, but also because they reduce the need for training time.
Create a Profit Machine by Training Your Employees to Use the System
When you identify a system that works for you and get it fully operational, it’s going to become your gospel. The way your employees work should be based on the systems you establish. If the system works, then you’re already on the right track to create your profit machine. At the same time, an effective system significantly boosts the ease of managing your employees. Remember: People can be hard to manage, but systems aren’t. Individual problems can be solved on a case-by-case basis, but the underlying issues that cause most businesses to fail can be addressed by adjusting the systems by which your employees conduct their work.
When Things Go Wrong, Take Note.
This ties into asking yourself the right questions. While it’s good to constantly be asking questions, there’s no better time to do so when things go wrong. When problems are exposed, that’s when they can be most easily analyzed. I’ll give you an example from my own experience. When things kept going wrong one year, I took a look at the trends and asked if there was any consistency. I found that most of the errors occurred within five days of a deadline. All it took to fix this issue was to push deadlines back a few days, and it worked wonders. Sometimes simple solutions are enough.
Implement Internal Controls to Eliminate Theft and Fraud
This is a word of caution more than anything else. Theft and fraud in business is more common than you think, and having internal controls to help prevent them can save you a lot of trouble. It’s easy to think you’ll never need them, and in an ideal world, you never will, but when it comes to theft and fraud at the business scale, safe is always better than sorry.
Create a Profit Machine by Taking Time Management Seriously
Time is the most important asset you have. Letting minutes, hours, and days get away from you can cost you precious resources. Using your time effectively can be what puts you over the threshold for creating a robust profit machine.
Learn how to Delegate Effectively (and Follow Through!)
The final step to creating a smoothly-running profit machine is to learn how to delegate effectively. Yours is a massively important role–if you not only delegate effectively but actively work to follow through, you’re boosting the efficiency of your business AND building a trustworthy name for yourself. Brand is a huge factor in business–you’ve likely noticed that the businesses with the strongest brands are ALWAYS profitable. Keep this in mind as you move forward.
At the end of the day, if there’s anything I want you to take away from this article, it’s this: There’s no better Return on Investment than improving efficiency. If you implement these twelve steps into the way you run your business, you’re practically guaranteed to create a strong profit machine in no time. Ask the right questions, take the right precautions, and stick to the systems that work best for you. I wish you the best of luck, and like I always say: “Let’s make this our most profitable year ever.”