Declining profits and excessive borrowings are the issues that for many firms cause the biggest headache, and this question is currently leading to sleepless nights around the country – but it is often the case that not knowing where to start is the biggest hurdle to making major improvements to your firm’s finances.
That inertia can come from apprehension about the answers you will find if you dig too deeply into your firm’s finances, and some managers find it easier not to ask how profits could be improved because they do not want to acknowledge the scale of the problem.
However, by embarking on a dedicated profit improvement programme, you can quickly identify the scale and source of leakages from your pipeline.
Big Opportunities - Quick Wins
Getting the most out of a profit improvement programme is all about big opportunities and quick wins – and the sooner you get started, the more likely you are to succeed.
The first step in the process, then, is to analyse the current situation and look to uncover the potential opportunities – and, importantly, the scale of the opportunities. These could lie in traditional cost reduction, or in more fundamental changes to the cost structure such as introducing more flexibility in people’s contracts.
The next stage is to turn opportunities into a list of specific actions, ordered by priority. Remember, the bigger the opportunity, the higher the priority and, likewise, the quicker the potential return, again the higher the priority the action should take.
Rationale and Process
The most important thing when it comes to implementation is to get people bought in to the programme, and to keep them on side. This involves clearly articulating both the rationale for the programme and the process that will be followed. Once the programme is underway and the firm’s people are on side, the momentum must be kept up to ensure that returns do not diminish.
How to start a profit improvement programme, identifying big opportunities and quick wins, is the subject of the LIPS Legal webinar Barry Wilkinson is delivering on March 20th (you can get more details and sign up at the LIPS Legal website).
In this webinar, Barry will identify the biggest difference between profitable and unprofitable firms, and explain the most common source of lost profit. He will then go through the top ways of improving your firm’s finances and tell you how to get started with your own profit improvement programme, including:
• Finding the biggest opportunities
• Identifying the scale of your opportunity – setting your outline targets
• Turning opportunities into a list of specific actions
• A simple way to prioritise
• Quick Win No 1 – my quickest ever result – same day effect
• Quick Win No 2 – the two most expensive words
• Quick Win No 3 – 40% in the first month???
• Quick Win No 4 – dropping between the cracks
• Getting the teams onside – launching your initiative and making it happen
• Keeping the Momentum