What would happen to provincial New Zealand if every small business increased its profit by just 10%? Business would be booming. So how can this be achieved?
Small business owners must do something a little bit different to make the crucial difference to their bottom line. Businesses that perform well are the ones that do something to set them apart from their competitors. It’s difficult to double your profits, but it’s not hard to squeeze out an extra 10%. We need an attitude of what can I do to perform better than last year? For a small business owner, it can make the difference between being a slave to your business, or seeing your profits grow.
With over 92 percent of all New Zealand enterprises being small to medium size businesses, there’s a lot to gain nationally if we can get even half of them to increase their profits by 10%.
There is no magic pill to fix or change business profitability, yet there is an expectation that somebody is going to provide the solution if we just hang on and wait. As noted in Minister of Finance Bill English’s recent budget speech, “there is no single silver-bullet that can achieve this – instead, we must literally do hundreds of things well.”
With that in mind, the best way to build a SME economy is business by business; and then within each business, step by step. This is part of the Japanese Kaizen principle and is one of the foundational principles that I run my own business by.
The word Kaizen means “continuous improvement”. It comes from the Japanese words “kai” which means “change” or “to correct” and “zen” which means “good”. Kaizen is a system that involves every employee in an organisation. Everyone is encouraged to come up with small improvement suggestions on a regular basis. In most cases these are not ideas for major changes. Kaizen is based on making little changes on a regular basis. Toyota Corporation of Japan was one of the first businesses to use the principle of Kaizen and is a prime example of the extraordinary success such a principle can bring to a business.
If you are a business owner, encourage your employees to come to you with ideas for improvement. They don’t have to be major. Culture an environment where people feel safe to come to you with ideas, knowing they won’t be belittled. Step by step, the incremental improvements made over time will result in significant positive change to your bottom line.
Achieving a profit increase of just 10% can be as simple as changing your sales and marketing techniques so they are more appropriate to your business. Many businesses spend too much money attracting prospects, only to then burn them before they become customers.
Einstein once said “you cant solve a problem with the same mindset that caused the problem”
If your business has’nt improved over the past 12 months, then sadly you are slowly dying.
I believe strongly in entrepreneurship. We go into business because we want the freedom to be our own boss and take charge of our destiny. But too often, the reality is that the business ends up running us, and leaves little time to pursue the better lifestyle we originally dreamed of.
Chin up, focus further forward, and get some help to strenghten your position today and see how many areas of your business could be improved by just 10%.