How to Run a Profitable Business With Fewer Sales
Only a startling 15 per cent of employees know the company’s priorities and only 6% of employees know their own individual priorities, let alone have seen the companies plan. This is a shocking lack of understanding but it can be fixed with only one piece of paper.
In your company, who is actually responsible for getting things done? There really is no such thing as co-accountability. In order to get things done right there needs to be one single point of accountability. Why? Because if you have two or more people responsible for one action; each will shrug if something doesn’t get done and say “it wasn’t me”. At the top, we call it accountability. At the bottom, they call it ownership.
ACCOUNTABILITY CREATES ENGAGEMENT
Running a profitable business that relies on fewer sales to make money is, to a large extent, about holding your sales team accountable for generating targeted sales aimed at your most profitable sector(s) by the right people on the team. If you set the right KPIs, you create higher engagement amongst your employees. When everyone knows what the main responsibilities are, you can ensure that it gets done and work is not duplicated. At the end of the day: what gets measured, gets done.
If the KPIs and results are visible, it allows for your business to be measured. There’s nowhere to hide as the numbers don’t lie.
Questions you can ask yourself and encourage team members to ask themselves are: “What piece of this do I own and how am I contributing to the execution of the strategy and to the future of this business?”
Basically, the more accountable you make people in your business, the more engaged they become (counterintuitive as that might seem).
A worldwide Gallup poll1 on employee engagement found that the number one thing people wanted was to know what was expected of them at work. Having clear accountability and visible responsibilities makes everyone clear on what needs to be done and will ensure things get done.
SETTING KPIS TO WORK FOR YOU
On that note, setting actionable and measurable Key Performance Indicators (KPIs), will be a determining factor for if you are hitting your business objectives or not
Having good KPIs are directly related to creating accountability and ownership (and vice versa). To illustrate this, we quote Peter Drucker who famously said: “You can only manage what you measure, and what gets measured gets done.”
KPIs are essential for business leaders to understand what is happening in their business. Do you measure the KPIs that drive your business model every week?
Terrifyingly, many businesses today are driving while looking through the rear-view mirror.
LAGGING VS LEADING PERFORMANCE INDICATORS
The problem with most KPIs is that they are “lagging” indicators, as opposed to “leading” indicators.
Lagging indicators are used to measure performance and allow the business leadership team to track how things are going. Because performance is always easier to measure by assessing whether your goals were achieved, lagging indicators are backwards-focused - they measure performance data already captured.
Usually, anything you monitor will have lagging indicators: return on investment, a budget to plan variances, number of sick days etc.
On the other hand, leading indicators, can change quickly and are generally seen as an indicator as to the direction something is going.
For example, changes in building permits may affect the housing market, an increase in new business orders could lead to increased production, interest rate changes will impact spending and investments and so on.
Leading indicators come before a trend, so they are considered business drivers. Identifying specific leading indicators should be a part of your business’s strategic planning.
VISIBILITY CREATES ACCOUNTABILITY
Without KPIs, everyone assumes that they and the company are doing okay. Clear visibility creates accountability. It’s a simple but powerful rule.
It’s important to clearly document who is accountable for the key functional roles in the business and how their performance will be measured.
Remember that less is always more. No more than a few metrics should define the role - don’t overdo it.
Running a profitable and successful business is all about getting the strategy development and execution right. Get our comprehensive, free e-book The Four Cornerstones of Strategic Execution to learn everything you need to know about executing your strategy well.