Increase Profits with No Pain, No Change Approach
Implementing changes, even when they're good for your business, can be tough. As the old adage goes, old habits die hard and it's just as true in business as it is in our personal lives. It's simply easier to take the path of no resistance and revert back to doing what we've always done. Here's a way to skyrocket your profit potential by linking change to pain and payoff.
Whenever I sit with a client who has hired me to assess and identify ways to streamline their business operations, we eventually get around to what I call the "no pain, no change" discussion. I can present a neatly packaged assessment report with recommendations for increasing efficiencies or streamlining processes, but new efficiencies and streamlining requires change. And, change typically meets with resistance because the way of doing things has become habitual.
As the old adage goes, old habits die hard. It happens just as frequently in one-person operations as it does in businesses with 10s, 100s, or even 1,000s of employees. It's just easier to take the path of least resistance by doing what we have always done. And, until you realize how 'doing what you've always done' dramatically affects your bottom line, change is less likely to occur. For any change in behavior, procedure or practice, there must be a desire for it - the benefits of change must become more attractive than the comfort of keeping old habits.
So how can a desire for change be ignited?
That's where the "no pain, no change" discussion starts. Quite simply, I relate the recommendations I make to actual bottom-line benefits. Let me demonstrate by using a real-life client example.
In a business assessment I did last year for a property management company, processing tenant payments was a four-step process from the moment the payment arrived, to the final posting and deposit of the funds. The company had two co-owners and four employees. Three of the four employees were involved in the payment processing procedure.
Now, this may sound like no big deal to you, but keep in mind that, as a property management company, they receive several hundreds of payments from tenants nearly every week for all of the properties they manage. There are many days when no other work is tended to, and they clock overtime to process checks the same day they are received; and then they clock more overtime to catch up on the work that was cast to the side. The more property contracts the business acquires, the more time it takes to process payments. The more time it takes, the more man hours are clocked. The more man hours needed, the less efficient - and more costly - the process becomes.
After talking with employees to understand the process they were using, and listening to the frustrations they were experiencing, it quickly became evident that the current procedure had lost significant value. What used to work perfectly had now become not only more vulnerable to errors, but costly. And, with the business continuing to grow, this was not a short-term challenge.
With minimal investigation I discovered that the process could be shortened to two steps, performed by two employees, with one simple solution -- an upgrade of the property management software they were using.
Naturally, the software upgrade was prominently placed in my assessment and recommendations report. I knew, however, that the owners would view this as an expense that would cost them more than $2,000 and, therefore would not likely top their To-Do list.
Time for the "no pain, no change" discussion.
In addition to recommending the software upgrade, I detailed a conservative estimation of the current 'real' costs associated with this procedure that primarily consisted of overtime and error reconciliation. I then detailed the estimated resulting costs associated with implementing the upgrade. The difference? A savings of nearly $7,500 a year! That's a significant profit leak for a small, 6-person operation.
Do you think the owners were more motivated to change the habit that currently supports the $7,500 profit-draining leak? You bet they were! Suddenly, it was evident that the $2,000 software upgrade was an investment, not an expense. It carries measurable ROI.
Because the client could now see an immediate (financial) pain, there was an increase in desire for immediate (procedural) change. Every critical process of your own business should be looked at with this same "no pain, no change" assessment.
What is it really costing you to do what you've always done?
Identify the pain, and you'll increase desire for change.
Susan Carter is a small business consultant and author of business-building books that help small business owners and soloprofessionals 'do more with less.' Free book chapters and ezine at: http://www.successideas.com
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