CNBC’s The Profit revolves around its self-made millionaire and entrepreneur host Marcus Lemonis’ People/Process/Product principle to analyze various companies across the country.
The attraction of the show, in part, is the discomfort some business owners have in adopting a new business philosophy and implementing improved procedures. The drama derived from the frequent tension between Lemonis and the business owners is definitely made for reality TV. But, the show has many lessons that suppliers can use to make their businesses better. Here are 4 best practices that supplier organizations can take away from the show.
- Understanding your customers better
As outlined in the Receivable Savvy Order-to-Cash Toolbox, a supplier will either lose or gain business based on the strength of customer relationships. It all begins when a supplier establishes a connection with a prospect. As it advances, the supplier needs to expertly manage the information pertaining to that relationship as it moves from the prospect stage to the order and fulfillment stage.
Marcus Lemonis continually encourages his business partners to understand what their customers want and how they want it delivered. He also explains how analyzing prospect and customer data can lead to hidden opportunities for the business.
- Having the right product/service mix
Lemonis often points out to business owners the need to focus on the right product/service mix. Too often, business owners are too close to the product and are unable to see it through the eyes of a customer. For example, in season 1 of The Profit, Lemonis visits Eco-Me, a cleaning supply company that creates all natural products. Unfortunately, the owners named their products after people such as Ted, Bill, Emma, etc. Lemonis pointed out that this was too odd for customers. Another example from season 1 is Planet Popcorn. By suggesting changes to their packaging, Lemonis showed the company how they could present their product that resonates more readily with customers and, in turn, generate higher profits.
- Getting your financials in order:
In a recent CNBC.com article …The 4 Most Common Mistakes That Entrepreneurs Make, Lemonis highlights the notion that business owners need to know their numbers, such as annual revenue, gross profit margin and expenses as a percentage of gross profit margin. All too often he has found that owners lack proper invoicing and colletions processes. In the episode with Planet Popcorn, he discovered the company lacked a process for properly managing its revenue – especially cash payments. Thus the company was unable to account for $400,000.
Many supplier organizations struggle with not only getting invoices to customers in a timely manner, but accounting for revenue from past due invoices. A robust credit and collections process will help ensure not only that past due invoices are minimized, but those that are in arrears are quickly resolved. Furthermore, an automated cash application solution can help any organization properly assign customer payments to the right account with very little manual intervention.
- Incorporating the proper technology
When driving businesses to the solution stage, Lemonis will often suggest incorporating software that can help business owners get organized in order to help put their numbers into proper perspective. While you don’t need to go out and buy the latest and most expensive programs, strategically incorporating technology into your business can help it be more efficient. Software that reduces the number of hours a company spends manually configuring reports, submitting invoices and managing cash application can quickly have a positive impact on the bottom line.
While not all of us can be self-made millionaires, we can still be successful by applying several components of Lemonis’ People/Process/Product principle to our organizations. By getting to know our customers better, developing a good product/service mix, improving how we handle important financial data and incorporating the right technollogy, there are multiple best practices within reach that we can implement in order to help our organizations run more efficiently.
Ernie Martin is Founder and Managing Director of Receivable Savvy. He brings over 25 years of experience in financial supply chain management, marketing and communications and draws upon his extensive experience to share knowledge and best practices with AR professionals. His resume also boasts time at several well-known brands and companies such as Tungsten Network, Delta Airlines, CIGNA Healthcare and Georgia Pacific as well as a number of years as an independent consultant.