What to do to maximise profits when the Market is your constraint?
When production goes faster than sales orders and you are left with idle/underutilised capacity it means that you are not maximising the profit potential of your business. Seems obvious!But it is not simply a matter of going out and getting more sales thinking the problem is solved. Traditional methods of increasing sales is either a fight to the death with your competitors and/or a promise your resources struggle to deliver.
Dropping prices to attract sales (away from your competition) damages profitability as margins suffer. Offering bulk purchase discounts or other sweeteners like a "free" product (that cost you) is another traditional method to lift sales but the long term effect can be damaging as you put production under pressure to meet bulk orders in shorter and shorter lead times with unceasing demands for quality and service. Your competitors are doing the same so you feel compelled to match them.
Well, there is another way to increase profitability without having to reduce margins. We call this approach a "Mafia Offer" or "Implementable Un-refusable offer" one in which your customer cannot refuse and your competitors can't or won't dare to match you.
If low sales is your issue we would be delighted to discuss how Dr Eli Goldratt's Theory of Constraints (TOC) can help you.
We highly recommend reading Dr Goldratt's second business novel "It's Not Luck" to discover some of the secrets to creating a Mafia Offer. Developed by Dr Lisa Lang former Goldratt International Marketing Director and President of Science of Business USA, we are licenced deliverers of her highly successful 3 day Mafia Boot Camp workshop. In 3 days you will get to build an implementable unrefusable offer that will begin to increase profitablility the moment you take it to market.
"We are doing well, in fact very well. Survived the global financial crisis where others in our industry are now out of business. The Mafia Offer is working very nicely for us and our customers using the service keep coming back." David Leach, Owner, Look Print, Sydney.
"We are making more money by delivering extra-ordinary value to our customers using our Mafia Offer. They are happy to pay a bit extra to get guaranteed delivery of steel and components same day." Grant Johnston, CEO, Best Bar Reinforcements, Melbourne/Perth
Call us on 0418 207 362 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it for a FREE Mafia Offer information pack.
