A Secret Formula for Business Successes that you cannot afford to miss
1) Every organization must understand how to generate sustained cash flow because a business is never complete if one cannot sustain long term growth and profits. Brands need time to develop and become perpetual magnets of growth. However profits needed to fuel Brand Development
2) One way to gain insight into the drivers of your business strategy is to pick one and only one parameter that has a profound influence on profits
3) If you look at “Profit Per Customer”, you get insights to help you make decisions regarding Business Volumes needed for sustainable business growth
4) If you are a man power intensive business like the Airlines Industry or the Hotel Industry then it is important to measure “Profit per Employee” because that will help you to understand the need to increase or decrease employees and regulated the service levels that your business can provide which will have implications on future growth
5) “Profit per retail location” is an important parameter to determine the distribution strategy and whether to open own stores or focus mainly on franchise model which in turn means that one has to invest on Brand Building
6) “Profit per square foot” determines another dimension of the distribution strategy; what kind of store formats one should have and whether pricing strategy needs to be adjusted and how much to accommodate the kind of stores the strategy demands
7) “Profit per geographic region” : This again is a factor for companies wanting to scale up their business. With limited resources it becomes essential to know in which Geographies one needs to expand and where one may have close down business
8) “Profit per product” likewise determines what Products to grow and what Products to discontinue and what Products play the role of cash flow and what products are playing the role of Brand Building
9) For Mutual Fund Distributors and Advisors it may be worthwhile to study “Profit per Customer Segment”. So if you can segment your customers into Professionals, Businessmen, Youth, Retirees etc. then this kind of analysis will again lead to clearer focus and more effective strategy
10) The key is to use the question to gain understanding and insight into your business model.
11) Simply asking these kind of questions alone can stimulate intense dialogue and debate and deliver clarity
12) Even if you fail (or refuse) to identify a single key metric. (KM), the Challenge of the Question can drive you to think deeper and unearth insights which you would have otherwise missed.
I rest my case