Manage Your Margin
Say No To Being In The RED
Managing margin is more important today than ever.
Below are four powerful disruptors of your personal and business margin (or the ability to stay in the black versus ending up in the red.)
Lets dig into four game changing margin factors:
Inflation: If actual inflation is two digit, meaning over 10% and your margin is single digit or under 10% it will only be a matter of time before your books will turn red.
Supply Chain: Both large and small businesses are being challenged with having the materials, tools and parts on hand. If your margins are razor thin and now add your projects being delayed, or compressed due to shortages, eventually your books will turn red.
Work Force: Recruiting and retaining qualified employees is becoming a huge disruption. The work might be in the pipeline but if the workforce is under experienced or under equipped, again that thin margin that worked in the past no longer delivers.
Rising Interest Rates: The ability to raise capital, get short and long term loans, for many small and medium sized companies has been a building block to growth and success. As capital dries up and borrowing rates go up, maintaining margin through growth becomes challenging.
1. Inflation: It is now the season to open up your contracts and have difficult conversations with your clients and customers. Your relationship with them needs to be nimble, flexible and able to adjust to inflation. As well, internally focus on building very clear honest relationships between your sales/bidding team and your project teams. Consider shifting to a project management software system that delivers real time lead indicators.
2. Supply Chain: This factor can seem out of your control. The truth is some companies have favour with their suppliers and some do not. How do you build favour with your suppliers? Three factors: Communication, honesty and transparency. It also helps if you have built the reputation of setting your accounts on time and without drama. Grow your culture in which suppliers feel a part of your team and your success. Recruit your suppliers into your inner circle.
3. Work Force: How does your team build a culture that attracts and retains top talent? Some of it comes down to managing your margin. If your business is built on a healthy margin that can flex and adjust quickly to externals like inflation then your staff and workforce need to know. We all want to be a part of a winning team. If your business is sinking into the red the same principle applies. Engage your staff and workforce in the battle of establishing healthy margins.
Righting a “sinking ship” if communicated properly can be a huge culture building experience.
Rising Interest Rates: If you are witnessing the disappearance of your margin in your business do to factors including rising interest rates stop, think and regroup. History tells us that in extreme economic geo-political situations there are many losers and a few winners.
Within Switchback’s consulting with small and medium sized businesses we help leaders pause and gain a 3rd party perspective on their activities. How can your business get on the winning side of history with rising interest rates, inflation, supply chain and workforce challenges?
The answers can often be found in the culture shifting mindset of engaging your internal and external team in the process of becoming a “thinking and problem solving workforce.”
Margins are being challenged.
Changes are needed.
1. Stop and think about the internal and external factors
2. Recruit and build a team dedicated to solving margin problems
3. Communicate Communicate, Communicate
We at SwitchbackOS wish you personal and professional margin success.
P.S. Don’t forget, People Can Change and The Power of Success is in TEAM