Knowing where and how profit is made in your business – and how to maximise it – is key to surviving and prospering in the new economic cycle. 

As a company leader you have no doubt made tough decisions during the last two years, slashing costs and trying to hold onto sales. The question now is “what next?”  

As a performance coach I can help you get to grips with the profit drivers of your business. Learning how to maximise their impact is key to its future prosperity. 

Profit is of course the amount of added value created over and above the costs. Profit drivers, put simply, are those activities in the business that influence and impact on the level of profit. 

There are five main areas in which you will find profit drivers:

• sales
• margin
• operations
• overheads
• finance  

Within each area there are a number of individual drivers that can have a significant impact on profits.  As every business is different you need to understand what is happening in yours, and why, and then dig deeper to discover what really drives your profits. 

In my next blog post I will examine the five main areas in more detail and explain how to identify your profit drivers. Meantime, here’s what you should do to make the most of your newfound knowledge. 

• Monitor the drivers as part of your monthly management reports and drill down to discover the impact they have on the performance of the business.  
• Make your managers accountable for the profit drivers in their areas, and have them identify ways in which they can improve the profitability of the business.
• Agree profit improvement targets for the business, built around improvements to the key profit drivers.

If you would like more information on this you can also email me richard.bosworth@whatifspecialist.com, follow @richardwhatif on Twitter and find me on LinkedIn under Richard Bosworth.