Leading Businesses to
Compete, WIN and PROFIT

BOOK INTRODUCTION

TOTAL PROFIT ABILITY,
Hundreds of Ways to Grow Your Profits

Superman, Batman, and even Spiderman had a lot going for them, but none of them achieved the status of Super Hero from running a successful business. Yet someone who is running a successful business faces even greater challenges and provides greater good for humanity.

My idea of a business Super Hero is someone who has built a Total Profit Ability team that successfully achieves Total Profitability.

Management consultant W. Edwards Deming was not a Super Hero, but he achieved something even greater. After World War Two, his insights helped the Japanese build the super powerful economy they now enjoy. Although he never referred to his vision as Total Profit Ability, he basically defined it in the following statement.

"What we need to do is learn to work in the system, by which I mean that everybody, every team, every platform, every division, every component is there not for individual competitive profit or recognition, but for contribution to the system as a whole on a win-win basis."
W. Edwards Deming

Total Profit Ability is about people; they are more valuable than profit, and no company can make a profit without them. The Total Profit Ability of your business is the sum of all its profit-making talent; it is a capacity. This book shows you how to grow your people's talent and your profits to their maximum and beyond.

Total Profitability occurs when everyone and everything in your business is engaged in growing the bottom line; it is a result.

Total Profit Ability is what makes Total Profitability possible. Ideally, everyone in your business, regardless of their level, would like to be perceived as valuable profit builders and customer supporters rather than just employees. Beyond just increasing profits, this book's purpose is to help you create that powerful profit generating motivational perception.

A worthy goal for any business, Total Profitability is a major achievement you will be proud of. In fact, instead of wearing a triangle with a capital S on your chest (like Superman), when you build the team that helps your business achieve the condition of Total Profitability, you deserve to proudly wear a triangle with a capital $ on it and be a Business Super Hero.

Why all the fuss about profit?

Think: What Would a World Without Profit Look Like?

Unfortunately, profit has been given a bad name by greedy Wall Street brokers and, almost but not quite as greedy, corporate executives. But profit in itself is not a bad thing. On the contrary, profit is a necessary good that helps make the world a better place to live in.

Have you ever asked yourself what would a world without profit look like? That world would be a very different, unpleasant place to live in. Consider the following:

• Without profit, commerce would not exist. Other than to barter supplies, there would be no reason to build businesses.
• Food would not be produced for sale because with no profit there would be little incentive to grow farms.
• Merchandise would not be created. With no stores and people with minimal income there would no buyers and no incentive to create and produce merchandise.
• Services would not be rendered because people would be too busy just trying to grow food to find the time to offer services.
• Clothing would be minimal because people wouldn't be able to afford it, plus there probably would not be a clothing industry.
• Companies would be only small businesses based on barter.
• Technology would be severely limited because education would be minimal, and funding would be almost non-existent.
• Inventions would go un-invented because technology and lifestyles would not encourage them.
• Communications would be primitive because of the lack of technology and funding, plus people would not be able to afford them.
• Jobs would not be created. The world would return to when there was a lot of work but no jobs; and people had to grow their own food.
• Roads would be dirt tracks, and cars would replaced by carts.
• Without profit as an incentive it is unlikely there would be an auto industry.
• Hospitals would not be possible because there wouldn't be enough doctors, and it would be harder for people to get to them if they did exist.
• Cities would be replaced by villages, and houses by huts.
• Transportation would be much more difficult, and people on farms would not have easy access to cities, plus there would not be enough housing.
• Governments would be inoperative as they would not be able to afford employees other than by raising taxes which people wouldn't be able to afford anyway.
• Books would still be hand written because without profit print shops, typewriters and computers would not have been invented.
• Philanthropy would not exist because it could not be funded.
• Religions would be much smaller because it would be harder to spread the word.

Profit is essential to civilization and, for the most part, has brought progress, improvement, comfort, welfare, wealth and health to humanity. Never underestimate the power and the benefits that profit brings to the welfare of the world. As a business person, never allow others to try to make you feel guilty about generating profits, as long as you do it honestly, and provide true value.

Profitability may tend to be elusive, uneven and irregular, and quickly vanishes when not pursued relentlessly. But the truth is that profit is generated by the people, for the people and the welfare of the people.

Total Profitability happens when everything and everyone within the company contributes to growing the bottom line. Every business should aim for Total Profitability because it is not only desirable but achievable. Besides, your business deserves to be totally profitable. This book shows you how your business can achieve Total Profitability.

A Profit Ability Lesson from Personal Experience.

No one is ever promoted to an easier job. On my first job as a CEO, I was given the responsibility of running a company that had been losing money for four years. It was in a sector of the chemical industry that I knew nothing about, and in a third world country that was going through major economic struggles. In fact, the goal I was given wasn't to make a profit, but to reduce the loss.

I gathered the local team and congratulated them on having reduced the loss so far. They had done a good job but, if all you focus on is reducing the loss, chances are you will never make a profit. So, I told them we were going to make a profit that year and continue to do so every year thereafter.

Did you ever notice that when you buy a new car, suddenly you begin to see such cars everywhere, and it also seems like everyone chose the same color for their cars. The fact is, the world hasn't changed, but your view of it has.

When you and your team think PROFIT on a daily basis, you begin to see opportunities everywhere and then — your world will really change.

A company that is losing money is like a sinking ship. So, the first thing we did was plug the profit leaks. Where were we losing money? We conducted a review of all our operations questioning costs, discounts, processes, purchases, expenses, policies, inventories, personnel, advertising, promotions, and so on.

Short term, we focused on those items that were obvious, and either eliminated or reduced them. While we did not fire anyone, we did not refill all the vacant jobs, and looked for ways to eliminate or merge them.

Then we focused on our prices and their relation to our product mix in terms of profitable versus unprofitable products. We improved the prices on slow-moving items and actually eliminated some that were clearly unprofitable; the prices on higher volume products were held level or slightly improved.

We visited our distributors and observed how they were selling our products. Where appropriate, we showed them how they could increase their sales volumes as well as their profits. Concurrently, we focused on growing our industrial clients by designing and developing new products for their specific needs.

None of these actions by themselves would have been enough, but it is amazing what the combined effect of small improvements can be. The more we did, the more we found we could do.

Within three months, we made our first profit and kept on doing so from then on, year after year. Basically, we did it by relentlessly concentrating our resources on the best opportunities, and by growing our strengths while reducing our weaknesses.

But the key word of the above paragraphs is WE. We did it all as a team. I could not have done it without the talent of our team. It is not enough to just think about profit; you need to think PEOPLE. When they, too, think PROFIT, they will see opportunities that you may miss, and will help you make them happen.

To get your team thinking and focused on PROFIT, you need to share your vision and enthusiasm, and do things every day that will motivate them.

"Our thoughts shape the space we live in, and the space returns the favor." (Steven Johnson, Where Great Ideas Come From)

In the end, as you grow profit, you will grow and profit by it.

Hundreds of Ways to Grow Your Profits!

Even though early on I shared an anecdote from my personal experience, this book is not about me; it is about you and what you can do to increase your profits. Total Profit Ability gives you hundreds of ways to grow your profits. Every chapter contains ideas, insights, formulas, approaches, strategies, tactics, and techniques you can immediately apply to your business in some way; it is vital, however, that as you progress through the chapters you keep looking for ways to use them.

The techniques CEO's, management teams and others have used to achieve Total Profitability are contained in these pages. You will have achieved Total Profitability when every part of your business contributes to growing your profits.

This book is about hundreds of ways to grow your profits, the kinds of things many CEOs may actually want to do but somehow never get around to doing simply because they are too busy with other activities that are not as bottom-line focused.

I recently spoke to a group of CEOs about Profitability, and was surprised that they were not yet aware of a number of Profit Building concepts and practices that I presented.

Immediately after that meeting, one of the attendees returned to his company and applied one of the Profit Building concepts. Within days, he calculated that the technique he applied would save him $120,000,or more that year. Follow the real world, practical advice in this book that can be applied immediately and you will begin to generate profits instantly.

Total Profit Ability is designed to help all levels of Entrepreneurs, CEOs, and top-level executives implement those practices. Regardless of what market or industry you are in, it will also help you develop your competitive advantage. This book will open your eyes to new alternatives and undiscovered opportunities, and show you the practical approaches that smart companies use to reach Total Profitability.

Note. You will notice that the book uses lots of bullets to communicate information and suggestions. One reason is because we business people want to get our information quickly and clearly; long paragraphs tend to turn us off.

Another reason is that in most traditionally written books, key valuable information is often buried in long confusing paragraphs. This book's bullets make reading easier and faster. Another reason for using bullets: they add up to excellent Tip Sheets and Checklists that you can use on a daily basis. (Pilots use checklists all the time, and you may have noticed that there have been a lot fewer airplane crashes than business crashes.) To make those checklists easier to copy and distribute to your teams, I have included them in the appendix, and also backed them up with a CD loaded with checklists.

Two things you need to make a profit:

Most books about profit are focused on finance and numbers. This book is about how you make profits, and concentrate them on the right growth and profit opportunities in and outside of your business. To do so, there are two things you need:

A System. A system is an organized way of making something happen. In this case, the system is this book; it will lead you step by step to becoming a lot more profitable than you are, and more than your competitors.

A Team. Why, because it takes a team to win; companies don't generate profits; people do! There is much to do in running a business, and it is more than one person alone can accomplish. For successful growth and profitability you need a team of talented, motivated people.

This Book's System

Most books on the subject of profit tend to be mostly about financials, but numbers — while vitally important — do not run the business or generate profits; they are mostly history. Profits come from developing talented and motivated teams that ensure the successful management of every one of a company's operations. This book shows how when well coordinated and profit-focused, those operations create Total Profitability.

• Profitability Test. The process starts with a Profitability Test. Its purpose is to review your current status, define existing problems, identify strengths, weaknesses, opportunities, and threats (S.W.O.T.), and help you to start focusing on the changes that will improve today's profits and generate tomorrow's.
• The Building Blocks of Profitability. As you read this book, it leads you through The Building Blocks of Profitability to the importance of thinking beyond daily operations, which shows you how to set bigger goals and make them easier to achieve by breaking them down into smaller, more manageable ones.
• Developing Your Team. It then shows you how to hire and develop the people who will help you reach those bigger goals.
• Profit Building Strategies. At this point, the process focuses on the types of profit challenging situations you will face, and provides you with strategic options for each. As most of those options involve improving Gross Profits, an entire chapter is devoted to the power of small but strategic changes that compound into significant increases of profitability.
• Pricing Strategies. Because the concept of the fixed price is substantially weakened in today's increasingly competitive global market, the book then shows how the combination of Product Mix and Pricing Strategies can enhance Gross Profits. It also discusses ways to defend prices by improving the perception of value.
• Revenue Increasing Strategies. As profitable growth is essential to the survival of every business, a complete chapter is dedicated to four basic strategies for increasing revenues. Because growth can be undermined by profit leaks, the next chapter is an analysis of the wide variety of profit leaks that exist in all companies, and why it is so important to track and control all of them.
• Differentiation. A major challenge in today's business is Commoditization, which is why an entire chapter is dedicated to Differentiation and the power of Perception.
• Costs, Expenses, and Resources. Having covered much of the mechanics of profitable growth of revenues, the following chapters focus on strategies for lowering costs, reducing expenses, and leveraging resources, basically how to save money.
• Going Global and Leadership. The previous chapters cover the What and the How of growing profits. At this point, the book turns in greater detail to the Who and Where with Team Building, Going Global (where much of future growth lies), and Leadership.
• The final two chapters focus on what needs to be done to continue to grow profits as the world and its markets continue to evolve in the years to come.

In summary, this book leads readers through the major business areas that increase profits.

• The Building Blocks of Profitability. Where Profit Comes From.
• Increasing Revenues. The Top Line Feeds the Bottom Line.
• Innovation. If You Are Not Different, You Can't Make a Difference.
• Growth Strategies. Where and How To Concentrate Your Resources
• Lowering Costs. The Art of Getting More for Less.
• Reducing Expenses. Plugging the Leaks First.
• Going Global. Hint: 95 Percent of the World's Consumers Live outside the United States.
• Team Building. Practice "One for All and All for One," and You Will Get There
• Leader Ship. On This Ship, You Are Both the Navigator and the Captain; You Show Your Crew the Way and Lead Them There.
• Anticipating Tomorrow's Challenges. Tomorrow's profits will be the consequence of the decisions you make today.

Your commitment to steadily growing your business's profits now and into the future will be amply rewarded in Return on Investment when you apply the ideas and suggestions this book offers. Whatever your level in business, whether it be C-Level (CEO), or Sea Level (Beginner), it will help you to:

• Develop a vision of where your business should always be heading.*
• Increase your awareness of the many threats and opportunities every business faces.
• Acquire the knowledge and tools to achieve sustainable growth and Total Profitability.
• Discover Opportunities to immediately apply the concepts contained in each chapter.

As mentioned earlier, this is a system in that it is an organized way of growing your profits.

* Q4U Why is this vision important? (Throughout the book you will encounter the abbreviation Q4U, followed by a brief question. It means "Question for You", and is designed to help you go deeper into that specific point.)

Answer 2 Q4U. Total Profitability is achieved when an inspired and well-focused leadership team concentrates on helping everyone and every part of the company become a constantly growing source of increased productivity and innovation. This is your goal because profit itself generates:

• Greater value for customers
• Above average returns for shareholders,
• More opportunities for employee development, and
• Builds a better world for all.

Think about it! Interestingly, just focusing on the bottom line is not enough to get you there. Why, because, as we said above, companies don't generate profits; people do. This book explains how to increase your bottom line and get measurable results; it also concentrates on doing so through building teams and leaders throughout the organization.

In the end, the PROFIT focus is on building a better world where everyone profits as a result of the benefits your company brings to customers, employees, and the communities around the world where you operate. One thing is for sure: it will keep you from becoming satisfied with the Status Quo, and that is good because the status quo has got to go if your business is to grow.

Think It. Ink It. Make It Profit.

Anytime and anything you think about PROFIT, put it in writing, share it with your team, and you will be on your way to Total Profitability.

Live each chapter as you read and relate it to your own business. The chapters are designed to involve you and help you evolve as you relate to the content from a user point of view. The content will help you focus on the practical applications of the information presented throughout, provided you use your imagination as to how to apply what you learn.

Your situation:

• Therefore, please imagine that you are a newly promoted CEO of a business that manufactures and sells products and services to businesses (B2B) and consumers. (B2C). Your sales are strictly domestic, that is, limited to only the markets of the country where you operate.
• Unfortunately, the country's economy is in crisis, your company's sales are down 20 percent from last year, the number of your employees has increased 15 percent over the last two years, the cost of goods is up 5 percent, and price competition plus widespread industry discounting are creating pressure for you to lower your prices.
• Cash flow looks good for at least 3 months, but banks are tightening credit.
• One of your competitors has just launched a new B2B product with major improvements compared to yours.
• Your union's contract is coming up for negotiation in six months.
• Your Plant Supervisor's autocratic management style is alienating some of your best employees who are threatening to leave if he stays.
• Your plant still operates well, but looks run-down and sloppy.

(Don't feel bad; nobody ever gets promoted to a job that is easier than the one they had before)

Given these circumstances, consider how you might use the information in this and following chapters.

Note. If you are already the CEO of a business, then apply the forthcoming information to your own business. On the other hand, someday you might be facing some of the problems mentioned above, so why not try to imagine what you might do under those circumstances?

Growth

Do companies need to grow? I remember telling the President of a major division of a large chemical company who had reduced R&D efforts that, if he continued this policy, he would be out of business in 12 years. I forgot about it after a while, but imagine my surprise when 12 years later to the day it did go out of business. (I don't remember where I got the figure of 12 years from, but I suppose there is some value to intuitive thinking.) The point, which will be reinforced throughout the book, is that you can't shrink your way to growth.

All businesses should focus on growing and making higher profits because, otherwise, they are destined to disappear. Total Profit Ability shows you how to take the current strengths of your business, and grow them to earn bigger profits.

Surprisingly, the biggest companies don't always make the best profit. Many smaller companies generate higher profits than their large competitors. Want your business to generate higher profits? Curious as to how these smaller companies generate such high profits? These are some of their approaches:

• Some are low price leaders,
• Others have built powerful brands for which they can charge more
• Some compete on the basis of efficiency which allows them to offer lower prices.
• Others are more innovative and offer better products and services that they can sell at higher prices.
• Some combine two or more of these approaches.

Q4U. Are you growing beyond your initial specialty areas?

Ready to make a higher profit? When you decide to become the best, you are already 51 percent there. The other 49 percent does take some doing, but this book will show you how, and walk you through the steps that make the profitability journey a lot easier for you.

Ready to go? OK, let's start with some things CEOs may want to check. For example:

• Do you know to grow your profits 24.15% with just three different 1% increases? Smart businesses do it; so can you.
• Are you familiar with The Four Avenues of Growth that will grow your business in good and bad times? Smart businesses use all of them all the time.
• Do you have 40 smart ways to increase your sales? Smart businesses make sure they use most of them all the time.
• What 2 percent sales improvement can increase your bottom line by as much as a 10 percent reduction of costs? Smart businesses are very aware of this option.
• Are you aware that three modest 5% increases can grow your profits by as much as 57%? Really smart businesses know how to do this; you can learn how.
• What are the three key business areas that you must watch closely to make it through tough times? They are no mystery, but smart businesses know how to make them work.
• What is the one thing you must not do in tough times? Smart businesses do everything possible to avoid this one.
• ould you believe that a modest 10 percent discount can shrink your profits by as much as 67 percent? Smart businesses work hard to avoid unnecessary discounts.
• Do you know how to leverage your current resources to increase your productivity to the max? This is a systematic process inside truly smart businesses.

The answers to these questions are spread throughout the book, but why not try to figure them out on your own now, and then compare your answers to the ones in the book later on? In addition, it is a good idea to keep the above points in mind as you go through each chapter because they help you meet the challenges that lie ahead in everyday business.

Why this system works:

In tough times, smart businesses don't panic. Usually, to some degree, they have anticipated and prepared for them. But even then, some crises are like a Force 5 hurricane; you can't possibly anticipate everything that will happen. Learn what you can do to survive a Force 10 economic crisis such as the one we face today.

They control their fear. It is not the fearless who accomplish great things, but those who conquer their fears and rise to challenges. It is good to be ambitious, to desire self-improvement, and to strive for better things. But it is not without fear. Nevertheless, fear is only bad when it freezes the mind and the body. A little fear is a good thing. It makes us quicker and agile, which is proven by how well we leap when frightened. Learning how to grow your profits will certainly diminish your fears because you will know what to do to survive and thrive.

They maintain a positive attitude. "In this world, the optimists have it, not because they are always right, but because they are positive. Even when they are wrong they are positive, and that is the way of achievement, correction, improvement, and success. Educated, eye-open optimism pays." David Landes, Historian, in "the Wealth and Poverty of Nations."

Note. Now, as the hypothetical newly hired CEO of a business that manufactures and sells products and services to businesses (B2B) and consumers. (B2C), whose sales are strictly domestic, (limited to only the markets of the country where you operate), please go back over the previous pages and see where you might apply the concepts contained in this introduction. As you do this, write down your thoughts for further consideration.

Q4U. You sell products and services; which are more profitable for you, products or services?

Key Profit Ability Thoughts to Keep in Mind.

Because People are your best source of Profits

• Excellence starts with people; they are the key to profitability!
• If you want to be more profitable, look to your people first.
• Hiring the best and setting them free beats micromanaging. (Q4U. Does "setting them free" make you somewhat uneasy? Are your people ready to be set free? Should they be?)
• Highly motivated and well rewarded people who are free to do their own thinking (rather than just being told what to do) produce more profits and fewer problems.
• No company is ever stronger than its people, and its people's strength is the product of talent, motivation, and the way they are treated.
• Creating a motivating vision, getting buy-in, leverages the power of purpose.
• Finally, customers are people and profits are the best sign of their satisfaction with the values you provide through your products and services.

Regarding Strategy and Structure

• Developing company-wide understanding of the Mechanics of Profit increases attention to productivity. When people believe in something, they do something about it.
• Planning and implementing ambitious, reality-grounded growth strategies increases day-to-day focus.
• Developing profitable pricing strategies generates higher revenues.
• Designing profitable product mixes leads to greater revenues and gross profits.
• Awareness of the need to leverage resources creates new sources of revenues.

Why building Exceptional Teams is essential to Growth and Profit

• Building and unleashing exceptional teams ensures progress.
• Exceptional teams grow productivity faster and consistently.
• It takes team effort to control costs and expenses.

Innovation is the key to Thriving and Surviving

• The best way to look for innovative solutions is to look for problems.
• Innovation that creates true customer value increases marketing success.
• Today's customers constantly demand new products and services.

Price: $19.99

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I hope you have found this introduction filled with both interesting and helpful ideas and tips that you can immediately apply to your business. The rest of the book provides you with one of the most thorough collections of profit generating ideas and strategies. Whenever you run out of ideas and solutions for generating profits, you will find yourself returning to Total Profit Ability time and again, and coming away with approaches that will get you to where you want to go. Try it; you'll like it.

Thank you for your interest.

Michael Wynne
Global President
International Management Consulting Associates
Author of Total Profit Ability, Hundreds of Ways to Grow Your Profits
(630) 420-2605