Profit Maps Model – How to Generate Profits with the Profit and Loss Statement

Profit Maps Model - How to Generate Profits with the Profit and Loss Statement

Enhancing profits is one of the main goals of any business, yet most managers do not understand how to move beyond the fundamentals of cost-reduction and profit improvement.

Profit Maps Model - How to Generate Profits with the Profit and Loss Statement
Profit Maps Model – How to Generate Profits with the Profit and Loss Statement

Generally, the company’s reaction to the need to decrease cost is to lower the workforce. In most circumstances, this is a mistake or merely a short-term solution. The ideal approach is to give employees a chance to participate in creating cost reduction techniques, so that profit improvement is continuous.

The Profit Maps shows how big businesses, a small business or a single department can build up its profits and reduce costs using the proven approach that is based on team innovation and management.

The Profit Improvement Phenomenon

In most business interactions only moments pass before some reference is made to enhancing profits. This is foreseeable because the primary focus of the business is to make profits. What is not so predictable is most managers’ limited ability to develop effective strategies for profit enhancement.

The Profit Maps Model

The Profit Maps Model acts as an engine for constant improvement, produces immediate results, and becomes a core competency for the business.

The Profit Maps Model consists of the following steps

  • Picking your staff
  •  Preparing your team and your business
  •  Brainstorming all the questions
  •  Taking action and documenting the results
  • Reviewing and following up

Each step in the process takes on a vital role. Systematically applied, they produce a synergistic approach the delivers consistent, continuous focus and improvement.

Selecting and Managing the Profit Influence Team

The use of teams specifically to improve profit and loss is uncommon, despite management’s widespread acquaintance with groups and what they can accomplish. The Profit Maps approach shows managers how to select the correct team members, manage meetings, and set concrete goals for optimum results in profit and loss management. When applied in proper sequence with the other measures in the Profit Maps Model, the Profit Influence Team becomes the engine that drives profit creating forward and perpetuates it.

During this process, individuals accountable for the particular line items report on the action steps, the results, and any demand for corrective action steps or new techniques. Each team member must report on his or results. Then all team members are encouraged to express their perceptions and give recommendations. After each discussion, have all staff members provide feedback to the presenter in terms of how rapidly or gradually outcomes are being obtained.

Preparing your Team and Your Business

Each team member has to be ‘prepared’ to understand the techniques of innovation management. Here the fundamental measures are to make the staff members recognize the enablers of innovations as well as how to deal with the setbacks that occur as the advancement process unfolds.

A training program should be used to help prepare the team for these enablers of advancement.

During the training, the staff will learn to recognize and determine the business’s capability to adjust, to lay the groundwork for future advancements, to measure the success of the idea, and to make needed changes. This process also teaches the team how to rely on the workforce for answers to tough questions- and tap into an input that can make the difference between success and failure.

Taking Action and Documenting Outcomes

Taking action and documenting the outcome is the phase of the Profit Maps Model that moves you forward toward the successful execution of your ideas.

Asking questions generates an endless list of ideas for further exploration. Our next step, taking action and documenting, exhibits how to use those ideas as a structure for building concrete programs for cost-reduction and profit enhancement. Taking action and documenting is the performance development planning exercise and administrative step of the Profit Maps Model. This step is essential since it helps us create whole action steps, track outcomes, and move towards performance, while at the same time serving as valuable program documentation.

Applying all of the components is essential. Since each element creates on the previous one, skipping a step would weaken the entire structure.

The criteria typically used when rating questions are those greatest likely impacts on the profit and loss statement, the most inspiration from the staff, the lowest capital investment, only a minor change to a procedure or process, and new training program as the only requirement.

Once ranked, the top questions have to be transferred to a performance improvement plan where action steps, measurement of outcomes and contingency planning can take place. Taking the time to document these pursuits improves planning to run more efficiently, keeps the staff on course and holds individuals responsible for the success of the performance improvement plan.

Reviewing Improvement and Following Up

Profit Maps Model is a dynamic, consistent practice. Its concepts when systematically utilized lead to continuity of profit improvement and cost-reduction. Reviewing and following up is the essential last step that retains the process going. Its critical role is to build a continuous enhancement process while keeping advancements current with today’s business needs and ensuring durability.

Reviewing and following up contains, a comprehensive review of each action step to determine whether the cost savings idea or solution has merit and can be implemented by the organization, a timely follow-up to ensure that the person responsible is, in fact, taking the necessary steps to complete the assignments generated via the efficiency improvement plan and a spark of ignition making the staff ask the perpetual question, what is the next profit improvement question?

Vital Piece

The Profit Maps is the vital piece that has been missing from organizational design- a continuous process for profit advancement and cost reduction that should be a part of every business.

Getting the process started will be an easy sell. The most challenging part will be overcoming the organization’s resistance to this new approach.

Set up a meeting with your manager and tell him or her that you want to put together a Profit Impact Team made up of five to eight employees from various departments within the organization. Mention that the objective of this team is to use the Profit Maps Model to generate a list of creative ideas that when implemented will start to create cost-reduction and profit improvement. Once you have the attention and support of your boss, you are ready to begin.

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