Nine Drivers of Upside Leverage & Exponential Business Growth - Driver #3

CAPITAL

The next big driver you’ve got in your business is your capital. This includes your human capital, your intellectual capital, and your financial capital. Human is basically the people who working for you¾the people that are there. If you can get everybody performing higher you’ve got incredible leverage. How do you do it? Well, there are three or four easy ways to do it.

Training

Every dollar you spend in training will produce 20-200 times return annually in yield. So, do you train your people? If so how often or frequently?

Do you train your selling people in formal professional consultative selling? Doing that will improve everyone’s performance in that category from 20- 2000% and keep them performing at these levels. Do you train your office staff in all the skill sets needed to perform at superstar levels?

Are they the fastest they can be at reading? Or are they the most proficient possible in typing? Are they the most skilled in time management? Are they the most effective in efficiency or productivity?

If you can get each of your people 10%-50% better in each of those categories, you’ve just doubled or tripled the effectiveness. Or you’ll be able to achieve the same result from one half the staff, time or cost ¾ and you can reallocate or remove 20%-30% of your staff.

What about your own capital expenditures? Are you questioning the yield you’re getting on the money you’re spending ¾ on the people you’re paying (both staff or contract services), on your marketing expenditures, inventory and technical services? It all ties in. What about your professional services and cost of sales?

If you don’t know how well your capital expenditures are performing but examine higher and better ways to operate in all these capital activities, you’re leaving enormous amounts of money on the table. I have two separate friends whose only consulting activity for the last twenty years has been to go to companies and improve their bottom line results just by cutting unnecessary expenses or getting them more productivity or more enhancements. Actually, I have three friends who do this ¾ each independent of one another.

One is an effectiveness coach and that’s all he does¾which is make executives three times more effective.

I have a friend who is a profit expert. He comes into organizations and finds bottom line improvements by reducing costs, expenses or non-productivity. I have another friend who finds underperforming areas of business no one even thinks about, does statistical analysis to figure out how much savings could be made by correcting or eliminating it and saves companies usually 10% of gross revenue just by analyzing and questioning the expenditures they’re making in every category.

If you don’t question the capital expenditures you’re making and the ROI (Return on Investment), the ROE (Return on Effort), the ROP (Return on People), the ROA (Return on Activity), and the ROO (Return on Opportunity), shame on you. It’s easy to do. It does take time but when you start doing it, you realize there are a lot of superior performing alternatives that bring expenditures to your performance results.

Think of it like you would an investment. If you had $10,000,000 to invest and you could get 2% in one money market equivalent but you could get 4% in another with reasonable safety and you could get 7% in another would you be content with the 2% if there was some way, in between, you could get double that with pretty much equivalent safety? Of course you wouldn’t.

You’ve got a responsibility to yourself, to your organization, and to your capital, to get the highest and best yield possible at all times. You can’t get the highest and best yield if you don’t first develop a monitoring, measurement comparative system and if you don’t start carefully examining, evaluating, identifying and observing how your current capital activities perform while evaluating them each against all the alternative ways you could be deploying that same financial, human or intellectual capital, time, and people.

Simple, right? Yes. But each element of improvement can add a 10%, 50%, or 150% improved yield to that area of activity. Imagine, if 100 people who have to read 5,000 pages a year could learn to accomplish that in half the time. Pretty interesting. Imagine if one production person knew how to get his job done 30% better and you figured out that he knew that and you taught it to the other twenty-five production people and you improved their combined company-wide production only 30% or even only 20%.

What would that mean to your bottom line? Imagine if you had a process that one person figured out (or you could figure out) that would reduce waste or scrap or refunds or charge-offs ¾ by 40%! What would that be worth?

Combine all of those and the other fifty or sixty different areas of your capital leverage opportunities, both financial and human kind, that you are invested in and you’ll start seeing tens of thousands, hundreds of thousands, even millions of dollars of bottom line leverage that you’re leaving on the table.