The Systems Thinker Blog

10 Ways Business Systems "Directly" Increase Profit!

Posted byRon Carroll

Many small businesses have "C-grade" systems and processes—rudimentary, seat-of-the-pants, and constantly changing as people come and go. However, some owners and managers catch the vision and create "A-grade" business systems that bring about a results-driven culture, delighted customers, and a prosperous enterprise. What grade would you give your business systems and processes?

Now, I wouldn't be so obsessed about developing effective business systems if there wasn't such an enormous payoff—a real take-it-to-the-bank benefit. Make no mistake; good business systems and processes will increase profit, stakeholder dividends, and your personal take-home pay!

Make money with good business systems

Good Systems Increase Sales and Lower Costs

Below is a list of ten ways that business systems provide a direct and measurable return on the investment of your time, effort, and financial resources.

  1. Effective marketing and sales systems generate more leads and a higher percentage of conversions (higher sales reduce the number of days to reach the monthly break-even point, and thereby increase profit).

  2. Smooth-running business systems elevate customer satisfaction and loyalty (happy customers return to buy more products).

  3. Good operational systems reduce employee mistakes, defects, wasted time, and rework (high quality lowers cost of materials and labor).

  4. Well-designed business systems increase efficiency, productivity, and throughput of goods and services to customers (speedy processes lower cost).

  5. High-quality systems minimize customer returns (less shipping, accounting, and recycling costs).

  6. Fast systems and processes shorten delivery/lead time (customers choose you over the competition).

  7. Effective business systems accelerate the turnover of inventory and accounts receivable (lower stock-levels, faster collections, and accelerated cash flow decrease cost).

  8. Efficient business systems and processes reduce the number of employees required to get the work done (fewer employees reduce labor cost).

  9. Good systems enable people to perform above their skill level (less-expensive people can perform higher-level tasks, also lowering labor cost).

  10. Well-designed systems and processes require less supervision and management oversight (fewer managers mean lower administrative cost).

Don't Be a Skeptic!

It makes financial sense to learn the Master Skill for developing effective business systems and processes—the only way to build a lasting organization. The alternative—low-grade systems—will limit your potential and could land you on a scrap heap with the other 85% of small businesses that failed to perform.

So don't wait another day! Pick the business system giving you the most frustration and turn it into one that shines—a system that pleases customers and earns you more money!

Related Article:
10 Ways Business Systems "Indirectly" Increase Profit.


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Tags: Business Systems, Customer Retention, Quality, Efficiency/Speed, Cost Cutting