Many business owners tend to rely on traditional methods such as cutting expenses, increasing prices, and reducing staff to increase their profits.
However, what if there was a better way to improve profit? By incorporating key business management skills, you can optimise your company’s resources and enhance productivity to maximise profit potential.
In this blog, we will discuss Six essential management skills that can help you achieve this objective. So, buckle up and get ready to take your business to the next level!
#1. Review How You Treat Your People
Dealing with people’s mindsets and attitudes is a complex matter, and there is no one-size-fits-all solution.
While treating your employees well can result in increased productivity and loyalty from some, others may take advantage of your kindness by making requests such as leaving early or coming in late, taking time off during busy periods, internet surfing, on-the-phone messaging, more puff time, requesting to work from home for more days, the list can go on. In short, managing employee behaviour requires a delicate balance of compassion and boundaries.
Here’s a case study.
Have you ever encountered a business where employees talked negatively about the company they worked for: its products, services, and internal politics?
That’s a sign of a lack of care in the business.
Putting employee mindset and attitudes aside, it’s essential to treat your employees with respect and not as old-fashioned subordinates.
In many cases, negative talk about a company’s products, services, and internal politics is a sign of a lack of care for employees.
It’s easy for business owners to get caught up in the bottom line and forget about the well-being of their employees. But just like your spouse, your employees need some TLC too.
This can come in the form of non-work-related activities like lunches or drinks in a non-office environment or even just chatting about non-business matters during meetings.
By breaking down barriers, you can make your employees feel appreciated and acknowledged, which can lead to them opening up and sharing valuable information that can benefit your business.
It’s important to remember that employees are not dispensable objects, and treating them as such can lead to demotivation and high turnover rates. Instead, view your staff as essential investments in your company’s success.
While there may be exceptions, most employees who are dedicated, skilled, and possess the right attitude will respond positively to being treated as valuable assets. By doing so, you’ll be fostering loyalty and motivation, which can lead to increased profits and growth for your business.
#2. Define Employee Productivity
Boosting your employees’ productivity is another way to grow your business’s profit.
The belief that the more people you hire, the more the work gets done is inaccurate.
To ensure productivity, you must first define their output, and establish a set of Key Performance Indicators. Ask yourself can they see what they must accomplish daily, weekly, and monthly?
Second, you want to ensure that your companies have written policies and procedures and an employee handbook, especially when dealing with tardiness, chronic attendance problems, and managing people who are missing in action (MIA) without notice.
Third, you should ensure that your employees clearly understand their weekly targets and objectives. We suggest you have weekly meetings with them on Monday or Tuesday, doing so will help them stay focused on what’s important and give them the opportunity to ask questions of bottlenecks. You can also use SaaS to track how your employees spend their time at work to see where improvements need to be made.
#3. Hire People With Good EQ.
EQ stands for emotional quotient, which is the ability to manage emotions with insight and wisdom. Great to have, but hard to find in employees nowadays. If you find someone with a good EQ, hold onto them and don’t let them go.
An employee with good EQ doesn’t get offended easily. Imagine how pleasant it would be to give constructive feedback without walking on eggshells. It’s a blessing.
On the contrary, hiring people with low EQ can hinder your business potential and affect your business profit. Here are 3 case studies to demonstrate staff members with low EQs and how it would affect your business profit, as follows: –
- They get easily offended: they curse, become defensive, and throw a tantrum when you give them constructive feedback about their behaviour and performance.
- People who display this behaviour will bad-mouth you behind your back and undermine your company in front of your customers. If you can visualise them saying to your customers, “Hey, I wouldn’t recommend you buy/stay/subscribe/join/book if I were you”, when they are on the phone, I suggest you trust your feelings and quickly let them go.
- People who display this behaviour will bad-mouth you behind your back and undermine your company in front of your customers. If you can visualise them saying to your customers, “Hey, I wouldn’t recommend you buy/stay/subscribe/join/book if I were you”, when they are on the phone, I suggest you trust your feelings and quickly let them go.
- They cannot get along with their colleagues. They make spiteful comments and throw verbal assaults at one another; they gossip and argue in front of your customers. I suggest letting them go and getting rid of both, as they are similar. Keeping them will only affect your business profit as customers will shun businesses whose staff are toxic. It is just unprofessional.
- They display violent temperaments in front of your customers, and as a result, both end up in a heated cursing argument with other customers watching.
- It would be ideal for letting him go or second him to another workplace where his assertiveness can be used. Do not keep them around for the long term, as the customer he upset will write a negative review on your Google business.
- However, there is an exception to this rule: when the customer is rude and difficult to your staff member and becomes aggressive towards other customers.
- It would be ideal for letting him go or second him to another workplace where his assertiveness can be used. Do not keep them around for the long term, as the customer he upset will write a negative review on your Google business.
The point is that such unhealthy circumstances could only lead to bad publicity. If it got out of hand, it would affect your local reputation and, consequently, your business profit.
#4. Inspect And Monitor Your Business Systems
Regardless of your business type, you must have a set of business systems.
If you run a service business, your business systems are the SOP (standard operating procedures), P&P (Policies and Procedures), or business intelligence tools. Moreover, with today’s technology, you can incorporate Knowledge Base software and house all your documented processes, workflows, and how-to videos within the server, hence providing a central point of access to your internal and external stakeholders who are seeking your best practice to execute and resolve their tasks.
Imagine your company keeps recruiting more and more people to keep up with work. But the problem is, the work never gets completed: you still get complaints from customers, and projects and assignments are way pass the deadlines. This could be the consequence of your staff members being unclear about their priorities and KPIs, as a result, they could only operate at 50% of their capacity due to a lack of direction, reporting structure, and technical know-how. If that is the case, how would that impact on your bottom line when it comes to paying that massive payroll that you’ve got?
Moreover, suppose you run a business that relies heavily on machinery and equipment. In that case, your business systems are audit tools, compliance sheets, checklists, assessment software, or diagnostic device to ensure your capital assets are well-maintained and in good working conditions to ensure zero accidents in the workplace. No business owners want to be penalised or forced to shut down by WorkSafe authority because of health and safety violations. Imagine if your business was shut down or served with a notice to cease operation. If so, how would that impact on your business profit?
#5. Be Financially Savvy
Although it sounds obvious, being Financially Savvy also means disciplining your spending habit.
To be financially savvy is to discipline your spending on non-income-producing purchases.
We all love to spend, most of us. We want the Mercedes, the Porsche, or the latest car model. We love spending money on our family, going on trips, and living a comfortable lifestyle. Some of us even enjoy hiring more staff to appear busy (because we can afford it) or keep collecting new business suits to demonstrate our choice of taste.
It is challenging to discipline our spending habits. And things can go awry very quickly if we don’t keep a close eye on our spending: default in your payments, 6 figure Tax debts, accumulating bad debt and interest owed, a few demand letters, and bit by bit, it takes a toll on your financial confidence.
And if you let things continue to fall by the wayside, the lender will seize your car, your credit rating will be affected, and eventually, and the Sheriff will come knocking on your door to confiscate your assets.
In business, your primary discipline should be only to spend the money you are entitled to: keep your expenses to a minimum, and try not to lose money on hasty or unwise investing decisions such as pursuing another business opportunity that promises you easy profits.
Another way to be financially savvy is to inspect your financials on a regular basis. You should always be aware of the ins and out of your finance and be in control of your financial situation. This attitude means that you should always be mindful of the income generated by your business through regular review of your company’s Profit and Loss (P&L) statement, Cashflow statement, and balance sheet. You should pay attention to warning indications that your business is on a loss, on the verge of bankruptcy, or in severe need of additional funding. You can avoid a lot of headaches if you discover the problem early on if you inspect your financials on a regular basis.
Furthermore, talk to your accountant to devise a financial strategy to support it. Your financial method can be as simple as spending within the budget, or only spending on things that are itemised in your yearly agreed budget.
#6. Tighten Your Credit Restrictions
If you’re offering your customers 14 to 30 days of credit terms, you may want to tighten them. Most of the time, they do not pay on time, thus affecting your business profit.
We recommend not more than 7 days, or if possible, payment in advance before rendering any services. Doing this will help boost your company’s profit because you’ll be able to collect payments sooner and give yourself more time to collect the money owed. It will also help reduce the risk of chargebacks, bad debt, and other issues associated with collecting payments from your customers.
To tighten your credit terms, you may want to raise your interest rates, shorten the length of your payment terms, or get your solicitor to redraft the contract terms. Credit customers may not like these changes, but they’re necessary for your company to stay afloat.
Conclusion
In conclusion, the above six major management skills can be implemented to grow your business profit. By examining how you treat your people, defining employee productivity, hiring people with good emotional intelligence, inspecting and monitoring business systems, being financially savvy and tightening credit restrictions, you will be setting yourself up for success.
After all, heightening productivity and profits involves more than just having a plan—it also means articulating a work culture founded on a foundation of leadership principles. The most successful companies have understood this and have implemented tried-and-true strategies for achieving their goals.
If you’re looking to join their ranks or to become an even bigger success story than the one you already have, consider joining the Business Growth Workshop or Mastermind program. The workshop provides expert advice and resources so that business owners understand what’s necessary and have the guidance they need to make it happen. I also invite you to watch my free training.to learn more.
