I have just finished a consultancy job and it happened again.
Everyone was focussed on costs.
few on profit.
What I mean is that every time we discussed a new business initiative the various managers either shared the costs or were quizzed on them:
The 'costs' of upgrading the ecom site
The 'costs' of adding new payment systems
The 'costs' of refurbishing some rooms
who cares about the costs IF it delivers an incremental profit and return ahead of the cost of capital
Obvious I hear you all saying as you read this
but I tell you, wherever I have worked almost no one wacks up a quick excel business case. You know a excel spreadsheet with the forecast revenue uplifts, the costs and of course the incremental profit.
Yet get the model built (and it can really be super simple) add some sensitivities and quickly you move from the debilitating discussion on costs to the uplifting liberating discussion on incremental profit.
Give it a go. Get one excel tab. Throw down the P&L headings, populate the numbers and focus on the incremental revenue that the incremental 'cost' generates and bobs your uncle the incremental profit will appear - then do the months payback and sell the story
I have even surprised myself with the incremental profit an initiative can throw off and how quick the pay back is
Good luck - and if you want some example of how to do this - dont hesitate to DM me and I can show you how - for free (now there is an offer!)
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