Profit Maximization!!

Profitability maximization is an essential objective that all businesses must pursue in order to survive over a long time period. All managers constantly juggle with several issues day in and day out but the matter that must remain super most in their minds and that must guide all their actions is profit enhancement. That may be easier said than done but this is the sole purpose of the existence of any business. Several start-ups and new businesses seek comfort in the false belief that a business can afford to incur losses in the initial stages and that such losses should be considered as an investment which would get returns as the business matures. The fact is that unless such organizations have an effective and workable strategy to turn their businesses profitable at a definitive point in time in future, this may not happen by itself. Not only must there be a conscious strategy to this effect, all organizational and managerial actions must be compliant with the planned actions and must convergeto achieve the target of profit maximization. Go anywhere across the globe and you will observe that the overriding way by which anyone evaluates management is its ability to produce profit. This holds true even for the non-profitable organizations. Such organizations may raise grants but that can only give them a short lived and false sense of security.

There is not a single position in any organization whose job role is not linked to profit generation. In fact, profit enhancement should be a key performance deliverable for all employees with quantifiable and measurable targets. This must be linked to different positions in different manner given the job role. People need to see a direct connect between their work output and profit generation for this to act as a guiding force behind all their actions. Not just this, the performance management and appraisal systems must be synchronized in accordance with this concept to enable achievement of the organizational objective of profit generation.

In business, every investment should be made bearing in mind the time factor. If an investment does not yield the desired return within the scheduled time period despite timely course corrections, it must be shelved by salvaging whatever may be possible. One must attempt to learn from errors and choose another course of action. There is no dearth of innovative ideas on business, but each idea must be evaluated on its potential to create profits before funds and scarce resources are committed to it. Those managers who distance themselves from the notion of profit creation are almost always the first ones to see their budgets getting trimmed the moment the going gets rough. Some crucial activities like Employee Learning & Development, advertising, employee welfare get hit under such circumstances as the management often fail to appreciate their linkage with financial gains. It is important to establish this connect in order to avoid falling into the trap of sacrificing the long term growth of the business.

New work ways encourage us to challenge the established norms of business. It is amazing to note how several elements of costs have the elasticity to expand or contract under different work approaches. And this makes a huge impact on the business bottom line. Again, different ways of carrying out business and shifting gears in response to the changing market dynamics can make the day for you.