One result of a “blowout” economy is the tendency for owners and managers to pay less attention to profit planning than in years when the business must scratch hard to generate sales, control gross margin, and manage operating expenses.
This is the time of year when executives begin to peek into their crystal balls in an attempt to make some predictions about the coming year. There are no guarantees about what 2023 will bring, but if next year is like many years in the past that have followed a period of unbridled growth, this is an ideal time to begin to think about profit planning for the coming year.
A good place to begin is to identify which measurements each job holder should take credit for reaching—and take the heat for failing to reach. All achievements are not equal in contributing to a worker’s success, so managers should make sure their reporting units understand which targets should be their top priorities.
While measurable criteria are most desirable, it is not always possible, so don’t fail to list a behavior just because you can’t figure out how to measure it. Customer care is an excellent example, i.e., smile, be polite, greet customers with a firm handshake, and thank them for their business.
Focus not just on measurable goals, but take the time to break down the performance necessary to achieve the primary goal. Sales is a great example. If salespeople are blowing their sales goals out of the water, they must be doing a lot of things right, but what if they are falling short of their goals by a significant margin? In that case, it’s wise to begin monitoring prospecting, including the number of credit- worthy and viable prospects they have in their funnel, frequency of prospect calls, their strategy for attracting their top ten prospects to the company, what they perceive their prospects’ top objections are, and what salespeople say is preventing them from improving their share of their existing customers’ purchases.
Where does education rank in each man- ager’s strategy for building a more productive team? If you want your people to be better qualified to lead, to sell, to purchase, to delegate, etc., they will benefit from more formal education.
For me, one of the greatest positives about our industry is the likelihood an innovative, hardworking, and committed raw recruit has of advancement in a building supply business. There are literally hundreds if not thousands of men and women in North America whose first job in our industry was driving, counter sales, building door units, etc., who are now a part of top management.
I believe executives who have the vision to include education as a part of profit planning will see their company’s organizational productivity grow at a far more rapid rate than those who rely exclusively on bringing this talent in from the outside.
There was a seminar we thought highly of in my old company that we used quite a few times; it was called Finance for Non-Financial Executives. We believed that any employee who had intelligence, potential, and ambition to advance within our organization would bene- fit from becoming more knowledgeable about business finance.
Another course called Fundamentals of Finance and Accounting for Non-Financial Executives is offered by the highly-regarded American Management Association (AMA). The course requires two days in the class- room, two lessons taken online, and two video e-learning modules before attending the seminar. The investment for taking this course is $2,545 for non-AMA members. â–
For more information on this seminar, turn to page 108 in AMA’s digital catalog: amanet.org/request-an-online-catalog/ or call 800.262.9699.
Bill Lee is a respected sales and business consultant in the LBM industry. For more information, contact Bill at leeresourcesinc@gmail.com
