Maximize Profits by Using These 3 P's Leaders take note: These three words are the key to profits.
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Profits are paramount if you want to have a thriving business. But as a business owner or leader, you may find it difficult and oftentimes confusing to land on a strategy that maximizes long-term profits. Where do you start?
Related: Growing Your Business: Strategic Leadership Skills for the Long Game
After years of personal experience working with and for various businesses, large and small, I have come to recognize the three fundamental leadership "P's" -- purpose, partners and proactive approach -- that I see as key to delivering increased profits year over year.
1. Purpose
Purpose is all about intention. Every decision, goal, product, service, process or action that's part of your business must be purposeful; there must be a reason or a need associated with it. Ask yourself, Why did I start my business to begin with? What aspiration or objective do I have, and what positive impact can my business have on others?"
Some business leaders believe their sole purpose is to make money, but if you look at some of the world's most successful businesspeople, you'll see that they had a greater vision in mind. Walt Disney, for example, did not create the most beloved cartoons and magical places on earth because he wanted to "make money" -- he did it to bring entertainment to children and create a place where parents and children could have fun together.
Indeed, the stated purpose of The Disney Company is "to use our imaginations to bring happiness to millions." But along with happiness, it's brought revenues, too. For its second fiscal quarter of 2015, Disney in May delivered a 10 percent increase in net revenue over the same period in 2014, announcing $2.1 billion dollars in earnings -- even as it provided happiness to millions.
Figure out what your own purpose is, then bounce every one of your company's decisions, processes, objectives and actions up against that purpose to ensure alignment and consistency. This will empower you and your employees to consistently work toward a common goal -- which ultimately will translate into greater profits for your company.
2. Partners
There are five key partners to consider in any business: employees, customers, suppliers, the community and investors. First, however, remember that a "partner" by definition is a person who is associated with or shares something with another person.
Unfortunately, in the business world, there is a tendency to think of partners as "units" or "organizations" and to ignore the actual humans that comprise them. But great leaders recognize that good relationships deliver profits. Happy, engaged employees have higher productivity. Positive customer experiences foster loyalty and higher revenues.
Collaborating with, not dictating to, suppliers leads to better pricing for your products and services. Supporting your local community or even the global one in its efforts increases awareness and potential increases in revenues. And engaging with investors who focus on long-term, not short-term, profits creates an environment for continuous growth and innovation.
For its second fiscal quarter this year, just such a company, Whole Foods Market, posted $142 million in net income. Whole Foods' focus on partners delivers innovative changes, such as its new line of stores designed to meet the needs of one segment of its customers, millennials. The new stores will offer lower-priced options that still align with Whole Foods' stated belief that what people put into their bodies makes a difference.
Related: Whole Foods to Launch a Less Expensive, Millennial-Friendly Chain
3. Proactive approach
Being proactive is about acting intentionally, instead of reacting, to circumstances. Because of the day-to-day demands and pressures of the business world, many leaders find themselves reacting to unexpected situations that arise; however, reacting always delivers less-than-effective results.
Why? Because reacting doesn't allow for time to consider the downstream consequences to the action. "Off the cuff" choices usually cause a disruption to something somewhere, which in turn often leads to a productivity decline or an increase in quality issues, both of which negatively impact profits.
I am not suggesting that being proactive has to take a lot of time; it can be virtually immediate. It does, however, require being mindful of the reason a decision is being made or an action is being taken -- and it is a mindset that understands that nothing is sacred and that there is always room for improvement.
Change is a given, because without change there is no growth. Companies that operate in a status quo or reactionary state waste valuable time and resources, which drains their profits. Proactive companies, in contrast, evaluate and reevaluate their strategies and change constantly to keep their performance fresh and alive.
For example, in late 2014, Southwest Airlines did a total rebranding of its company and planes with a message that showed it cared about people. That new tagline, "Without a heart, it's just a machine," demonstrated Southwest's love for and focus on its people and customers.
That refocus apparently worked: After its first quarter this year, the airline posted record earnings of $453 million -- 30 percent higher than the same period in 2014. While lower fuel costs did contribute to these record profits, making proactive decisions and actions certainly made an impact as well.
Want to maximize your business's long-term profits? Act with purpose, focus on your partners and be proactive. Embrace the three P's, and watch your bottom line soar!
