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Succeeding as a profit-driven manager

“Pennies don’t fall from heaven. They have to be earned on earth.”
Margaret Thatcher

Boosting profitability is a constant leadership challenge and is a task by which most – if not all – business leaders are judged. Whatever the organisation and whatever its stage of development, ensuring profitability requires two things: a focus on the right priorities and an ability to influence attitudes and behaviour.

Understanding how to boost profits – increasing revenues, controlling costs and managing risk – is a vital business skill. This toolkit provides practical techniques to increase the profitability of your business.

Length: 14 pages

Contents:

Action Checklist: Boosting Profitability
• Focus decision-making on the most profitable areas
• … and decide how to treat the least profitable products
• Ensure that new products enhance profitability
• Manage development and production decisions
• Consider using price innovations
• Increase profitability by managing people
• Use a simple risk management process
• Control costs
• Establish and monitor market entry and exit barriers

Avoiding Problems – this includes avoiding potential pitfalls such as: making financial decisions without reference to other parts of the organization; forgetting that financial decisions affect everyone; poor budgeting and budgetary control; unplanned cash-flow; lack of commercial expertise; weak budgetary control, and not knowing where the risks lie.

Dos and Don’ts

Key Questions

Things You Can Do
• Apply break-even analysis to new projects
• Review production issues affecting profitability
• Monitor sales and customer issues
• Manage people issues affecting profitability
• Manage cash
• Influence attitudes
• Apply variance analysis
• Use ratio analysis
• Focus on ratios relating to markets and products
• Apply financial and other data (including balance sheet dynamics) for major decisions
• Set performance targets
• Balance revenue growth with risk and cost control
• Create a positive climate for managing risk
• Seek and seize commercial opportunities
• Undertake a SWOT analysis

Further Action

Further Information