What Kept This Business Owner Up At Night?

What used to keep me awake at night?

GP% depreciation.

No, wait! Come back…

It was the bane of my life and of my sleep. It was the only metric I really cared about. And it was going down – perfectly in line with an increase in revenue. I was losing control of the tail of the business.

It was a relatively complex issue centred around a diverse portfolio of multiple product variations, underpinning a high volume, low margin business. But the bottom line was, we were growing and did not have the systems in place to cope with it. The compounding fact was that not only did it need to be plugged, it needed to be increased.

It was making my head hurt. A lot.

So after discussion with the Leadership Team we agreed to share our pain with the whole company. We identified four good reasons for this:

  1. Everyone deserved to know the current business reality.
  2. We needed everybody’s help and experience to create solutions.
  3. To succeed we had to unify the company behind the issue.
  4. We anticipated change and wanted everyone to be part of it.

Reasons to not do it?

  1. None 

The first step was to level the playing field when it came to information. Over the next four weeks, we lifted up the bonnet of the business and offered complete disclosure on every piece of relevant data available. Most of this stuff had taken front and centre of Board and Management meetings, now it was there for everyone to see. In previous years this was a strict no-no, but I didn’t see that we really had any choice.

Through this activity we dissolved job roles and responsibilities and replaced them with common purpose and a collective feeling of business ownership. Everyone’s ideas were allowed on the table and departments worked in other areas to cross pollinate the thinking.

Bottom line, everyone gave shit about GP%.

So what happened?

We stabilized the erosion, and over many difficult months slowly but surely increased the percentage figure. It wasn’t pretty at times, we had to break a few things to fix them but with everyone’s backing and involvement the ride was made far easier. We maintained what I called the “Brain Farm” approach when it came to issues in the business and how we interacted with each other day to day. Problems were everyone’s problems and we all had an opportunity to contribute to the solution.

And my sleep? Sure that stabilized too, until we turned around the next business corner……