In this article, we are going to talk about the most important goal, that every business must meet, in order to raise its profits. Entrepreneurship can be described as a chain on which every link is (and must be) stronger than the other. A weak link will soon be a broken link, and this will have an impact on the whole business chain.
Talking from time to time with small and medium businessmen, I have the tedency to ask them a simple question.. «What is the goal of your business?«. Often they respond me, by telling me for the subject of their business, and what kind of products or servives, they are creating and selling. This isn’t the correct answer. The answer am waiting to hear from someone who waits to make a living from his business, is a simple one and common for pretty much every company. «My goal is to make profit from what am doing!«, period.
If you do not have a profitable business, then you may face 2 possible situations. Either your business reaches its Break Even Point and you barelly survive (which means you are only able to cover your financial needs and you do not have any profit nor loss), or you are having loss and you are unable to cover your financial needs, which means that instead of profit you are generating debt. When your debt to the public services – employees and providers increases and you see no escape, you’re starting to make desperate attempts, such as getting official or unofficial loans, in order to pay your previous debts (yes it happens). Well by doing this, there is the possibility to reduce your debt, but you may also increase it since now, you have also to pay the loan(s) you got, with their interests.
So, since we have found our subject of working, and we have scan the market we are going to enter (we have found our first customers), and we have also believed that our goal is to generate profit, then we are going to start planning how to do so. An idea would be that, if we increase our customers, thus we increase our sales, the profit will come as a result. Well, it’s not that simple..
Here comes the second question am oftenly asking, «What is the most important part of your business?«. Usually the answer is «My people, the sales representatives», and some others putting together also the Marketers. Sales and Marketing are working together, marketing thinks the promotion strategy, and the sales are executing this strategy. If you don’t have marketing you can’t have sales. Let’s take for example the companies that are working with B2B Sales (when a Business sells something to other Business), we’ll see that they do recognize the effords and the importance of their sales representatives, and in order to keep them happy and motivated, except of their basic monthly salary (550€-900€, in Greece), they also provide a percentage of commission from every sale’s gross profit, or a bonus per semester if the company reaches the target, or both if the company is financially robust enough. By providing such benefits, the employers believe that the motivation of their sales representatives will be increasing and they will feel better, so the profit of the company will be increasing too. This way of thinking is correct, what’s wrong here, is that the most important part of a company, isn’t the sales but the Manufacturing – Production – Storage department. If there wasn’t a department with employees to work on the machinary and keep producing, creating new products, or developers to create new services, or «pickers» to do the hard job on a storage facility, then there wouldn’t be a reason for any other department (link on a chain) to exist, for there would not be any services or products to sell.
The point is, that most businesses are not provide the lowest level workers of production or storage department with extra benefits, such us bonusses and discount coupons (those are also a great help..). The Moral Rewards such us «Congratulation, you’re a very good employee», are a good start but alone they do not have a practical impact, so the employee cannot measure your appreciation for his own hard work. Thus, to keep the lowest level employees happy and motivated, you have to provide them with measurable rewards that they can use, in order to pay their financial obligations, and still be able to organize activities that making them feeling better.
You MUST always appreciate each and every one of your employees, no matter the position they have within your company. That way, you will earn the respect of your employees. Most of the executives, were lucky enough to start their career after their studies, right from an office position. Thus, they were never had the chance to see the true problems that lower level employees are facing, in terms of business matters, and personal issues too. If you do not work as others do, you may most probably do not understand the difficulties of their working environment and their effords, hence you may not do anything significant for them. Study the numbers isn’t always the best way to run a business.
I, both had the priviledge and the «lack of luck», to work on a warehouse and both study the same time for my MBA. I had to work in order to financially support a bit my family. So I went to work as a «Picker» in a job considered to be very hard (by the law) and with a net salary of 500€ per month. Signed a contract for working 8+1 hours per day (1 hour were the overall duration of intermissions), Monday to Friday. Practically never happened, the projects of the company were increased, company didn’t wanted to pay for more workers, so we had to work up until 13 hours a day, and weekends also. We were greatelly underpaid and with very low safety measures (working 15m from the ground without safety equipment and helmet). They made me a team leader but without any pay raise. I was sick and tired of all this exploitation so I left. I have also done this kind of jobs in the past. I have seen the faces of the workers (I was one of them..), going to their job, having to work on the freezing cold of the winter (whereas the executives were working in their own warm offices), working overtime and with painful concequences for the body (knees and back were in pain every single day). Working on a job that will not be the vehicle that would eventually taking me to self-development, and made me find a better working position, so that I can built a career too. Back then, I didn’t had the energy to think anything, I could barelly cope with my studies, and surelly couldn’t do any plans for a better professional future.
My free advise to everyone has a business and employees, is that you need to care for every employee you have, and to show it with actions. Give them an objective on their professional life, and you will have and incredibly producting force! The way we feel has an impact on everythink we are doing, and a person feeling in a positive way, can only be productive and efficient!
Thank you for your time!