The power in incremental change
Filed under:
The Grand Canyon is perhaps one of the finest examples of how consistent small changes over time accumulate into grand accomplishments. Yes, that took thousands of years, but across ten years, or even just five, a company can transform itself into a highly profitable outfit without dramatic change.
How? Nothing complicated – just improving prices and controlling costs, a little bit here, a little bit there.
Consider a case where over five years we consistently increase volumes by 1%, add 1% to prices, negotiate 1% better prices with direct cost suppliers, and keep overhead costs down 1%. A £10 million turnover company making £1 million operating profit will improve profits by over 90% to £2.3 million.
The secret is continuous improvement, looking a for a little bit here, and a little bit there. Finding 3% across the board will triple profits – and this is before adding in underlying sales growth.
It’s easy to blow small improvements, so constant vigilance is necessary. Recruiting that expensive person “for the future”, or moving to those really nice premises, just accepting a supplier’s first offer, or failing to follow up leads could wipe out gains.
It can’t be done overnight, but those small improvements, year after year, will accumulate to create a grand accomplishment.
To achieve those improvements, you’ll need teamwork, and FD4 are good people to have on your team. We’ve had experience with many different businesses and are skilled in helping business owners identify improvements which can accumulate and transform their business.
Please do get in touch if you would like to find out more.