I’m Too Busy to Think About Profits! - Modern Distribution Management

Log In

I’m Too Busy to Think About Profits!

Growing profits is the true measure of a great business. How much time do you spend learning how to get more profit out of your company?
Ian_Heller_headshot_85x85
Author
Date

On several occasions, I’ve presented to Jack Welch — while I worked for GE and also when I worked for a distributor Jack invested in. It won’t surprise you to hear that Jack expects you to generate profits: he demands earnings growth, every year. If you don’t, he’ll find someone who will.

To say that operating reviews with Jack are extremely candid is like saying that executions have a primary purpose. He dives deep into your numbers, ideas and plans with relentless zeal. You get rapid-fire, detailed questions that test to see if you have absolute mastery of your business, your customers, your competitors and your industry. Woe unto you if you can’t answer them. 

The executive team from my division at GE presented to Jack three times per year. We prepared for about a month for each meeting. That means we spent a total of three months — 25% of our time — doing almost nothing but thinking about the business, evaluating the numbers, getting information about the market, competitors, customers, etc.

I believe we knew our business, our industry, our operating metrics and best practices for driving profits better than any competitor because we spent more time working on it. We knew the ultimate test of our expertise was coming soon and we’d have to retake it every four months. 

Strategy Must Drive Profits

When I meet with the CEOs of distributors, I often wonder how they’d do in a meeting with Jack Welch. In contrast with GE, where strategic planning was a continuous, relentless and vibrant activity that was all about growing profits, many distributors don’t do it at all. Or, it’s a soft activity that is mostly inwardly focused and isn’t linked directly to the budgeting process.

Most major distributors have a budgeting process, of course, but it’s usually just a bottoms-up roll-up. It’s not connected to a strategy and it’s not developed with an ever-present, profound fear of Jack. Many companies go through multiple rounds of budgeting because CEOs often don’t set clear expectations up front: “Let’s see what the field comes up with on their own.”

I did not find Jack Welch reticent to communicate expectations around numbers. 

Jack set demanding goals and our job was to find a way to meet them. We looked under every rock and behind every line on the budget to squeeze out more revenue, take out more expense and deliver that bottom-line number he expected. And you had to get better and smarter at it, month after month, quarter after quarter, year after year. You had to outthink, outwork, out-study and out-execute your competition — and if that’s not the definition of a strategy-driven company, then you’re doing it wrong.

If You Don’t Have Time to Learn About Profitability, What Are You Doing Instead?

“I don’t need to grow my profits,” said no CEO, ever. The reality is that every single thing you want do with your company is funded by your ability to generate income. Want to make an acquisition? Hire more talent? Put in new technologies? Improve training? Pay bigger bonuses? Make donations to your favorite charities? Sell your company?

If you grow profits, you can do any of these. If you don’t, you can’t. Profit growth is the true measure of business leadership. If you don’t have time to learn how to drive more profits, your priorities are out of whack. 

Where are Your Profit Opportunities?

I’ve been making some calls to invite people to our upcoming conference, MDM’s Pricing & Profitability Summit. By far, the most common reason I hear that people can’t attend is that they’re “too busy.”

Really? You have something better to do than attend a conference with a bunch of experts and distribution leaders who have come together to learn how to improve profits?

We’ve got a great lineup of speakers. This isn’t just a seminar on how to raise prices, although we’ll talk about smarter pricing practices, of course. But we also have long-time distribution executives and the best consultants in the business to teach you how to improve profitability across your business, from negotiating better with your suppliers to reducing your costs-to-serve to managing your balance sheet more effectively.

Take some time to do a deep dive on distributor profitability. If you have a conflict, then find someone in your organization to attend, take good notes, build some relationships and teach you what they learn.

Click here to learn more: MDM Pricing & Profitability Summit 2019.

I hope to see you in Denver. If you have questions or comments, leave them below or send me an email at ian@mdm.com.

 

Related Posts

Share this article

About the Author
Recommended Reading
Leave a Reply

Leave a Comment

Sign Up for the MDM Update Newsletter

The MDM update newsletter is your best source for news and trends in the wholesale distribution industry.

Get the MDM Update Newsletter

Wholesale distribution news and trends delivered right to your inbox.

Sign-up for our free newsletter and get:

  • Up-to-date news in a quick-to-read format
  • Free access to webcasts, podcasts and live events
  • Exclusive whitepapers, research and reports
  • And more!

2

articles left

Want more Premium content from MDM?

Subscribe today and get:

  • New issues twice each month
  • Unlimited access to mdm.com, including 10+ years of archived data
  • Current trends analysis, market data and economic updates
  • Discounts on select store products and events

Subscribe to continue reading

MDM Premium Subscribers get:

  • Unlimited access to MDM.com
  • 1 year digital subscription, with new issues twice a month
  • Trends analysis, market data and quarterly economic updates
  • Deals on select store products and events

1

article
left

You have one free article remaining

Subscribe to MDM Premium to get unlimited access. Your subscription includes:

  • Two new issues a month
  • Access to 10+ years of archived data on mdm.com
  • Quarterly economic updates, trends analysis and market data
  • Store and event discounts

To continue reading, you must be an MDM Premium subscriber.

Join other distribution executives who use MDM Premium to optimize their business. Our insights and analysis help you enter the right new markets, turbocharge your sales and marketing efforts, identify business partners that help you scale, and stay ahead of your competitors.

Register for full access

By providing your email, you agree to receive announcements from us and our partners for our newsletter, events, surveys, and partner resources per MDM Terms & Conditions. You can withdraw consent at any time.

Learn More about Custom Reports

Request a Market Prospector Demo

  • This field is for validation purposes and should be left unchanged.