Book Summary Preview : Profit Building

The Big Idea

Ludy’s five-step process shows how to organize teams with the specific purpose of improving profit. When employees are involved in the cost reduction strategy and are actively seeking creative ways to cut costs and keep their jobs, the result is a win-win situation all around.

Written for managers, supervisors, senior executives, consultants, small business owners, and accountants, this valuable resource addresses the real bottom line –everyone builds profit.

We should focus on profit the same way we focus on marketing, human resources, and operations. It is after all, the reason we stay in business.

1. What Managers Need to Know About Cutting Costs and Improving Profits

The Profit-building process is based on reliable and sound business practices grown from the author’s 25 years of experience in a variety of corporations and industries.

First, there must be a Profit-Building Team composed of people from different departments.
Second, a framework for asking all pertinent questions
Third, Brainstorming for appropriate solutions
Fourth, Action steps must be taken
Fifth, Review and follow-up

The main objective is to seek and implement alternative solutions other than slashing the workforce. Cutting jobs must be seen as the last resort in any enterprise.

The Profit Improvement Paradox
If the main focus of business is to make profits, then why are most managers focused on everything but profit-building?

The Profit Improvement Paradox Test
-Choose a group of 10 to 15 managers from different areas of responsibility within your organization, from different levels (junior managers to senior executives).

-Call an impromptu meeting and ask them to bring only a blank pad and pen. Do not inform them about the agenda.
-Once assembled, have them quickly jot down their answers to the following questions:

• What are the top 5 most costly items on your profit and loss statement?
• What written action plans are in place to reduce cost for those five items?
• What are your variable costs and what have you done to reduce them?
• What are your fixed costs and what have you done to reduce them?
• Name five vendors/suppliers from whom you purchase supplies or services. When was the last time you negotiated for a better price from them?
• Which of your costs are down from a year ago and why?
• . . . . . . . . . . .

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