8 Ways to Bulletproof Your Bottom Line
Profit leaks lurk deep inside almost every service business, silently draining off hard-earned dollars. Nowhere is this truer than in a highly specialized service such as fast lubes. Some are harder to detect than others; some far more damaging than others. Together, they can form a major obstacle on the road to optimum profits.
Here are eight steps you can take right now to straighten the path to a consistently healthy bottom line in 2016 and years to come:
1. Polish your image.
Because of the personal nature of service businesses, trust tends to play a bigger role in the selection of a supplier than it might in other types of businesses. So, how do you go about polishing your image of trustworthiness?
Among the most important building elements in an image of trustworthiness is willingness to listen — something that doesn’t come naturally for most of us. Most people want to do more talking than listening. Although we may not be conscious of the reason, most of us feel comfortable in the company of a good listener.
Learning to listen well is not an easy task. It takes a great deal of self-discipline, but from a professional standpoint, it’s well worth the effort. We tend to trust people who are willing to take the time to listen to what we have to say, and we tend to trust people who seem to make a genuine effort to understand what we are saying. Sharpening your listening skills will go a long way toward building your professional image and plugging a potential profit leak.
2. Make full use of banking technology.
Your bank would like you to pay your bills electronically, and they’re making it easy and profitable for you to do so.
Until recently, the idea was slow to catch on. Change doesn’t come easily to most of us, especially when it comes to how we handle our money. Fear on the part of many about the security of paperless transactions added formidable hurdles on the road to a checkless society.
Lately, however, the sluggish stream of business owners viewing and paying bills online is becoming a raging torrent. At today’s cost of almost a half-dollar postage for each check mailed, plus the cost of buying checks, the savings in money and time is becoming an irresistible lure to computer-savvy owners and managers.
Online banking providers now offer a wide variety of easy-to-use systems, and experts say security is a minor concern. Some experts claim banking and paying bills online actually reduces the odds of identity theft by cutting off thieves’ access to the papers they need.
Improvements in technology and user-friendly websites make online bill paying almost as easy as logging on to check your email. Check with your bank. Chances are, they offer free online bill pay. You’ll be surprised at how easy and profitable it has become.
3. Hire with caution.
Yes, finding good employees is more difficult than ever. Still, your staff is the cornerstone of an efficient and profitable operation. A single employee functioning at less than optimum and honest levels can wreak havoc on your business and on your bottom line. At the very least, check all references and do a search on criminal convictions before hiring. If you have any doubts or unanswered questions, don’t hire that person.
When interviewing a potential new hire, take the time to listen. Don’t make the mistake of doing more talking than listening. Make an effort to gauge the person’s ability to blend in with the existing culture of your operation and the personalities already on your payroll.
Increased turnover is only one of the problems generated by hiring the wrong person. A personality that isn’t comfortable in your environment can harm your business in ways that are far less obvious.
4. Concentrate on human relations.
Once you’ve staffed your business with the right people, it’s up to you to make them feel that they’ve found the right job. With all the daily pressures and stresses with which you must deal, it’s easy to overlook the emotional burdens that lay heavily on your employees.
Favoritism, or even the appearance of it, can be a deadly enemy of efficient and profitable operations. An employee who feels he or she is the victim of favoritism is likely to cause serious damage to your business.
Make a special effort to show appreciation to your staff in a fair and equitable manner. The importance of skillful human relations in a modern business environment is well established. Even the appearance of a lack of respect for an employee can undermine your best efforts to develop a pleasant working environment.
Another common mistake made by some owners is, failing to accept the blame when something goes wrong. A reputation for always putting the blame on others is a management deficiency that will eventually exact a heavy toll in the form of employee unrest. Being in charge means being willing to take responsibility for whatever happens on your watch.
5. Be aware of human weaknesses.
Despite the best of pre-hiring screening or the length of service of trusted staff members, human susceptibility to temptation will always be present, especially in a service business. While your natural inclination may be to trust the people you hire, you should institute safeguards to minimize the chances of loss due to ever-possible dishonesty or simple carelessness.
Deposit revenue receipts daily, and make no exceptions. Make sure a paper trail is created for every transaction involving the movement of cash. Be especially watchful over the system for handling petty cash. This is where embezzlement usually begins.
If you have good reason to believe someone may be stealing from you, report to the police at once. If you put off that unpleasant duty, you could be making it more difficult to resolve the problem.
6. Take action on marginal employees.
Discharging an unproductive or disruptive employee is the sort of unpleasant task most business owners and managers dread. However, failing to take action when necessary can be a costly mistake.
Keeping a problem worker around to create more trouble makes a bad situation worse. That’s not fair to you or your other employees, and that can result in added stress on other employees who may have to take on more work and dissension among those who can’t understand why you are keeping the employee on your payroll. In turn, this can negatively affect the treatment of your customers.
In short, once you identify a disruptive or unproductive employee, it’s best to face up to the unpleasant task of terminating the relationship. Postponing it can only lead to a more serious problem later on.
7. Mind accounts receivables.
If you do any of your own billing, you must maintain good records of how much money your customers owe you. Whatever system you use to keep track of accounts receivables (A/R), it must be capable of telling you whether any accounts are overdue by 30 days or more. If that comes to 10 percent or more of your total A/R, you need a more aggressive collection policy.
The more casual you allow yourself to become about collecting the money owed to you, the more casual your customers will become about paying you.
8. Watch bank statements.
Never forget banks are in business to make money, and all of their income comes from customers like you. In today’s increasingly competitive environment, banks have turned to new and costly fees to bolster their revenue. Many of their charges are seemingly small and harmless. However, if left unnoticed, they can relentlessly eat away at your bottom line.
That’s why it’s so important to have someone responsible for scanning each month’s statement to ferret out charges you can avoid.
While it may not be possible to completely bulletproof your operation, careful adherence to these eight management techniques will greatly reduce your exposure to unnecessary and costly losses.