One of the major factors to be considered ineffective business management is the importance of profit. One method of applying effective profit management is by analysing key factors using an acronym known as SYCO:
- Service
- Yield
- Control of Costs
- Optimum Volume
Service
For many organisations, their product is the service they provide. Just as with the tangible product, the service needs to be consistently of the highest quality and precise specification. Similarly, it should be priced at a suitable rate and must meet the customer’s expectations.
Yield
This is the price you request for your product or service. It must be perceived by the customer to be fair and reasonable and indicative of competitors or market pricing.
Control of Costs
Costs are a necessary component to running a business, a major factor for management to control. Improved financial performance is achieved from prudent management of costs and an understanding of how costs relate to income earned by the business.
Optimum Volume
This is the volume that, if generated, will fully utilise the existing resources, will not involve incurring any new costs and will maximise returns. This is not maximum volume. Seeking maximum volume can severely effect service, increase costs and deteriorate yields.
To achieve success the key factors of profit management must be balanced. A disciplined approach must be maintained.
In an ideal situation, all the factors should be constant. In reality volume changes due to seasonal demands and changing economic conditions. The recipe for disaster is if we seek to make volume constant. This will make the other factors variable and therefore drive down yields, lower product or service quality and eventually cut costs further.
Mark is a respected consultant in taxation and business management, in particular business advisory services implementation and delivery using key structured advisory systems and software.
Are you interested a complimentary Business Advisory Readiness Assessment with Mark? This 45 minute on line process will challenge you to plan forward with alternate revenue lines, consider the issues and risks that need to be managed to create success and determine the type of practice you want in the short to medium term.
Contact us to confirm a suitable time.
