How Do You Know?

Often we accept our results, be they business or personal, as satisfactory compared to industry or our competitors. As a result we tend to concede to ourselves that these successes are sufficient enough and we become content with one’s past or present honours and achievements.

We can be alert to the possibility of being excelled or surpassed by others and react accordingly, yet rarely do we look to our own internal and untapped capacity to excel and surpass our own results solely from our own growth aspirations.

I have spoken with other Professionals in similar businesses to mine and they laud their consistent achievement of a net profit (EBITDA, that is earnings before interest, taxes, depreciation, and amortization) percentage of 40% or 52% or 63%. How do they know they should not be getting results of 78% or even higher? I’m getting at least 80% with a constant goal to get this higher.

My experiences with clients is similar whereby contentment with their results seems to be enough and little or no thought goes into what, why, when and how can these results be improved.

This is because we fail to ask ourselves the right questions and to ask why.

Here are some other examples where we need to pose the question of “how do you know?”

  • Our sales growth is 18% per annum. How do you know it shouldn’t be and can’t be 27%?
  • The value of my business is 2.5 times profit. How do you know it shouldn’t be and can’t be 4 or 5 times profit?
  • Our key customer metrics are the envy of our competitors. How do you know there is still not more room for improvement?
  • Our customer satisfaction rating is very good. How do you know these customers can’t be turned into evangelists for your business?
  • My current net profit is sufficient for my lifestyle. How do you know it will be sufficient in the event of a dramatic life event or to a potential buyer of your business?
  • Our cash flow cycle is good and allows for the business to run smoothly. How do you know it cannot be improved dramatically which in turn increases the bottom line and the value of your business?
  • I am on target to reach my financial aspirations by the time I retire. How do you know you haven’t given adequate consideration to preventive measures and contingencies that can appear out of nowhere?
  • We can’t raise our prices because customers will leave us. How do you know that they wouldn’t leave if the price increase was commensurate with the new value you could provide?

Can your financial results be dramatically improved? Yes – how do you know? No – how do you know?

© Garry Beavis 2014.

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