Whilst 1% doesn’t sound like an enormous amount, it holds incredible power when it comes to driving profits up in any enterprise. It’s a common mindset in businesses in infant stages to ignore the minor adjustments that need to be made in place. ‘Grander’ plans and, even more commonly, in management teams and executives that lack exposure to detailed financials.
This is where the importance of a skilled and detail-focused CFO becomes apparent and this role becomes hugely complementary to the vision driven characteristics of most owners. The power of a compelling vision will drive and motivate the team and facilitate growth, however, it’s the key financial metrics that will maintain profits whilst providing the management and executive team the ability to make critical financial decisions that won’t inhibit the growth rates of the business.
We often see the fastest growing businesses hit the hardest cash flow problems and, in turn, require pivoting to a consolidation strategy in order to regain control. A lack of understanding in financials and focus on critical numbers can allow this to happen too late and as a result, profit leakages equal lost cashflow which equals increases lost opportunity.
By switching to the 1% mindset all the issues above can virtually disappear or at the very least have a significantly reduces risk of occurring.
The 1% Mindset
This is a simple mindset that doesn’t relate to only financials but as we all know the financials are the measuring stick and enable management to understand where the processes, team, business unit or any other shortfalls in the business model may be.
1% can be applied to: –
- How can specific costs improve by 1%?
- How can systems improve to enable team members to work 1 % faster?
- How can we improve customer feedback/results by 1%?
- How can the error rate be dropped by 1%?
Along with every other aspect of the business.
Most importantly, how are you tracking and measuring the results of implementing this type of strategy and how is its success isolated from organic improvements throughout the business?