The Importance of a Profit Model
John Taylor of www.smallbusinessowners.com says, “To get a quick gauge on how well your business is doing and where problems may be arising, you can use a profit model. A profit model is essentially a stripped down version of the profit and loss report prepared by your accountant each year that you can use to get a quick summary of how your business is doing in terms of profit.
The Profit Design
James Fischer, author of Navigating the Growth Curve and creator of The 7 Stages of Entrepreneurial Growth process adds to what John Taylor has to say, “A company is never too small to organize their thinking and planning around revenue groups. I consider these 12 factors so critical that I refer to them in a phrase I borrowed from the space program: mission-critical factors.”
In the last three issues of Tips For Transformation, I examined each of the twelve elements of Profit Design and can be found at effectiveness.com/tips-for-transformation.
Here is a summary of all twelve elements of Profit Design with the definition for your review and reference:
1. Value Exchange
The profitable organization and exchange of value for money.
2. Customer Intelligence
The informed awareness of who the customer is and what they want.
The range of products and services to be offered.
4. Business Development
The fusion of targeting, capturing, and caring for the customer.
5. Strategic Control
The unique power of your offerings.
6. Strategic Allies
The specific external partners engaged to expand sales.
10. Operating Systems
The support structure for critical enterprise processes.
11. Research and Development
The continual discovery of solutions to your customer’s needs.
12. Capital Intensity
The measurement of required financial resources.
In The Next Issue: The Profit Zone Activities that Must be Maintained and Continuously Improved.
Schedule a Free Discovery Call with Me to Explore How to Apply the 12 Components of Profit Design to Your Enterprise.