A client recently told me they had plenty of work, they just need to consolidate their position. He meant they needed to make sure they could deliver what the customers wanted, and to become more efficient at how they did that rather than look for growth this year. He wanted to optimize performance and reduce overhead to be sustainable.
HOW MUCH IS 10% WORTH?
Let’s look at this – write down your annual turnover in $, now write your cost of sales, and what you have left is your profit. Now what if we changed one of those numbers without impacting the other? For example, what if we reduced the cost of sales by 10%? What would that mean to you in dollar terms?
COMPLIANCE SHOULD DRIVE IMPROVEMENT
For compliance to turn from a cost to a benefit, it must drive improvement in some if not all areas of the business. And for you to understand this you need to know the cost of doing business. Write down all the costs in your business and separate which ones are overheads. This needs to be understood, as you can only grow so much without increasing overhead.
How much do you think you can increase sales, projects, or production before you need to increase overheads? This might be one target for you. If the answer is zero, then perhaps you need to focus on reducing costs first. This could be through improved productivity, better systems, or other ideas to reduce waste, rework, down-time, errors, changes, injuries, incidents, complaints, and so forth.
There are so many areas in a business that when focused on could deliver a 10% improvement. Implemented well, a compliance system will help you find them. Invest in improvement programs to work on these areas, and one by one these 10% will pay for compliance many times over.