Performance Groups: Peer Pressure can be a Good Thing!
"If you always do what you've always done..."
You know the ending to this old saw, and when it comes to your company's financial results it is absolutely true.
By now, you are well into Q1 2017. Are you receiving a P&L statement and balance sheet by the 15th day following the close of business at the end of each month? If not, you're already behind.
So how is it going? Are you ahead of last year, dead even, or are you falling behind in sales, profits, and cash flow? And if you are falling behind, how are you going to improve things?
Think about this: What is the hardest thing for any business owner to do? Find a new product? Fire someone? Get a loan?
None of the above! The hardest thing for a business owner to do is something different!
You attend conferences and hear great speakers share new ways of doing things. However, you come back and the same alligators that were eating you before you left start chopping you up once again, and all those great ideas and aspirations fall by the wayside, just like last time. If you're truly interested in doing something different, maybe it's time to consider a performance group.
A performance group is a group of business owners who meet regularly to share operational and planning ideas and act as a board of advisors to each of its members. These groups use a skilled facilitator, financial benchmarks, structured agendas, financial analysis training, and have administrative support.
What is their impact? With consistent accountability, members integrate financial benchmarking into the ongoing process of monitoring and managing their business. Applying this process with a group of peers provides a pool of "best practices," or standards, to draw from when implementing new plans.
What makes it work? The members working together. Participating in a performance group gives owners a resource for solving business management challenges faster and more effectively.
What are the results? By focusing management efforts toward a plan, group members can go beyond crisis management and actually create the company they want to own. Members achieve their goals far more quickly and efficiently than doing it on their own. Here is one franchisee's answer after participating in a Profit Mastery performance group:
"In my honest opinion, this program is by far (the franchisor's) most valuable initiative. As confident as I was about my ability to manage and control my office's financial and operational metrics, I was very humbled as soon as I saw my financial and KPI results compared with the other owners in our group.
The improvements in our business have been dramatic across the board: financial improvements, operational improvements, process improvements, quality improvements, and employee satisfaction improvements. The breadth and extent of the improvements are both humbling and inspiring!"
Adding up the benefits
The following data from a previous performance group participant will give you a sense of the benefits of the program in only one of these areas: owner profits, arguably the most important metric to most owners.
- Our 2011 owner's discretionary profit (ODP) was 11.6 percent.
- In the four quarters since starting the program (2012 Q2, Q3, Q4 and 2013 Q1) our ODP averaged 15.4 percent.
- This increased ODP percentage equals an actual increase of $170,000 in ODP dollars for the previous four quarters (compared with what my ODP dollars would have been if I was still at my 2011 ODP percentage level).
- In the past two quarters (2012 Q4 and 2013 Q1) my ODP percentage increased to 16.7 percent, which equals an annualized increase in ODP dollars of $238,000 (compared with 2011 ODP percentage levels).
About right now you're probably saying, "I don't have a performance group available to join, but I do need an accountability partner." If you're interested in learning more about our performance group process, I would be happy to share that information with you. Please feel free to contact me.
If it's not possible for you to join a group, I have a solution for you! America's SBDC (Small Business Development Centers) provides free counseling services to business owners throughout the country. Their counselors are often former business owners and bankers who bring a great deal of experience to their counseling activities and provide terrific services to clients.
To find the nearest SBDC center, search online for America's SBDC and type in your ZIP Code. Set up an appointment, become a client, and your SBDC counselor will assist you in driving up the success of your business by helping you set goals, measure them, and manage better to achieve them.
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