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The five keys to sustainable profitability

The environment in which we are currently operating offers far fewer opportunities for sustainable success than we enjoyed in each of the past several decades.

February 23, 2011  By Jim Brown

The restructuring that took place in Canada and most other G20 countries has altered the terrain and we are not soon going back to those days of robust prosperity. That means that as an independent business owner you must become more creative, more persistent and more astute than your competition if you are to build sustainable profitability in your enterprise.

As an entrepreneur, you first must ask yourself this tough question. Are you “in it to win it” or is this just a way to keep from working for someone else? At the end of the day, will you have built a business with equity that someone will want to buy (or inherit), or will you simply turn out the lights and take a long walk into retirement? The questions may sound a bit patronizing, but they speak to the foundation that you are laying and the future sustainability of the model you choose.

This series looks to provide you Five Keys to Sustainable Profitability. There is no guarantee that it will make you wildly successful and a challenge to the “big guys.” But if you have the discipline to follow these keys, you will have a template to follow that leads to success.

This industry does not give up its profits easily. Some internationally successful companies from other industries thought that they could buy their way to success but found that without solid experience, this is a tough playground. They ended up selling off and getting out of Dodge. Others find growth so difficult that they must buy competitors in order to sustain growth on the top line. There is not a lot of low hanging fruit left out there.

  • I could just say that you should do one or more of the following:
  • Sell more jobs at your current margins.
  • Sell the same amount but at better margins.
  • Sell less but as much better margins.
  • Get more wallet share from existing clients by selling other products.
  • Find new markets to cultivate.

And in point of fact I would have fulfilled my mandate because each of these is a valid, if simple, solution.

But what if we really examined our operations and critically looked at all aspects of the business. Where could we legitimately uncover lost opportunities that, once we understood, we could leverage along with the simple five notions listed here. It is in leveraging that which is simple with that which represents the “best practices” that will allow you to turn a corner to sustainable profitability.

Individually, any one of these next five keys may strike you as simplistic. But how many of you are actively practicing and implementing these keys. In subsequent articles over the course of the year we will look at each one of these points.

  • Know your true costs.
  • Accurate estimating.
  • The Value of Quality.
  • Become an Expert.
  • Learn what to charge.

By the end of the year you will have learned some new ideas and approaches. Because you will have had time between each issue to absorb and implement each element, your business should build on a more solid foundation.

Clearly there are other important factors that contribute to running a successful business whether it is large, mid-size or small. Outstanding leadership, employing and developing great people, and having an intelligent plan are also fundamental to success.

But those are for another series. For now let’s focus on these keys. Then hopefully the answer to that tough first question is one that is clearly answered: “I am in it to win it.”

Jim Brown is the principal of James B Brown Consulting Inc., a management consulting firm with a focus on the electronic security industry.

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