I know what keeps business owners up at night. It’s that slow silent steady drip of cash leaking away from the bank account each month. Your company may have profit leaks. Leaks show up in the places you are not looking.
When Dario Franchitti roars his Indy Car into the pit, he relies on his crew to make sure his engine is operating in peak performance. Like dominoes, when the ignition is turned, the sequences have to fire at precisely the right time for Franchitti’s engine to give him the performance he needs to win the Indy race. Poor timing means power leaks.
The same analogy works for a company. If something in the company’s operation doesn’t respond in the right time, with the right information, the company gets a leak in its performance and productivity, which creates a profit leak.
Let’s look at how the dominoes start to impact a business.
A customer tells the salesperson (waiter, sales rep, banker, distributor, store clerk) what his needs are. Like lots of people, he describes his need in terms of what he doesn’t want. The salesperson hears frustration in the words the customer uses and is hesitant to ask questions. Instead, the salesperson assumes that he understands and scurries off to fulfill the request.
Leak #1: The salesperson hasn’t been trained in how to use questions to get at the real need.
Now the salesperson’s assumption is in the company’s operating machine, getting produced.
Leak #2: No one validates the assumption with the customer.
The sales person presents the product, service, meal or project and the bill to be paid. The customer does not see the solution to his problem. He sees a problem. The salesperson is embarrassed and frustrated. The blame game starts.
Leak #3: The company must remake or rework the product in order to be paid.
Leak #4: The salesperson blames the customer for his poor communication. The customer’s opinion of the company goes downhill. The company has just lost the opportunity for future sales to this customer.
Leak # 5: Management assumes the screw up must be the salesperson’s fault. And without any attention paid to Leaks 1 – 4 they produce leak #5 by blaming the salesperson and dumping him.
And the profit leaks continue unabated. The profit will drip away with new personalities managing the fall out.
In future articles we’ll share how to fix these profit leaks in a variety of different businesses. Stay tuned.
Share your leak stories below. What do you notice dripping away in your company?