This article is written for decision makers and chief executive who wants to face financial reality, take a challenging management decisions, using the latest technology to improve our products and ultimately implement a restructuring plan to medium scale production or small scale unit profit.
article is a capsule only help, it will only stop the bleeding. Complete healing and strengthening of the unit for the future is the responsibility of top management.
We should know that SMEs are responsible for nearly 65 percent of global GDP - representing more than 90% of all businesses, employing more than 90 percent of the world's workforce. So, we have a social responsibility to see that this unit would get to survive.
do not need an MBA to be a shift in the production unit to get. You should have a lot of courage, strength analysis, a perfect plan of action and a core team to implement the plan. This is the only requirement. We will go systematically and step by step to build a master plan.
We have made a simple formula borrowed from my grandfather, who was a successful businessman. It has been proven Step cyclic formula as follows: -
(1) Calculate the ratio of gross profit (2) Analyze (3) Build a Plan of Action (4) implementation of (5) get feedback (6) Develop corrective measures (7) Accessories (8) Calculate the gross profit ratio Go to (2) again.
This is an endless cycle that is carried out in accordance with the anatomy of the production unit. Remember that each unit has its own character depending on its location, person, power, product, marketing, building and plant and strojeva.Uspjeh cyclic formulas will completely depend on the ability to collect accurate data management. Now we will explain the steps.
Step-1. Calculate the gross profit ratio - that is the ratio of gross profit to net sales as a percentage. Gross profit is the difference between net sales and cost of goods sold. For production units, the cost of goods sold will be equal to the sum of the costs of raw materials, wages, direct expenses and costs of production formula is:
Gross Profit Ratio = (Gross Profit / Net Sales) x 100
The gross profit ratio is an indicator of the extent to which the merchandise selling price per unit can be reduced without incurring a loss on operations. Gross earned income should be sufficient to recover all operating costs and build reserves after paying all fixed charges and interest, dividends. Gross profit is higher is better. If you find your gross profit ratio is low and decreasing every month and then analyze the business as below.
2 Analyze: - collecting responses in statistical form to these questions. (a) the profit picture temporarily low or sick? (b) Is the core business remains financially viable? (c) Replacement of non-productive members of top management and reduce layers of management. (d) Determine the most profitable customers. (e) Decrease in investment in less profitable products and increase to more profitable products. (f) In the immediate vicinity of some facilities to reduce overhead, selling less and less use of facilities, off-load some objects eligible producers (g) Reduce administrative functions. Outsource all the costly duplicate services and lay off staff. (h) to explore advanced technology to streamline production processes and products. (i) Accelerate the development of highly profitable products by shifting resources from less profitable products. (j) Establish an automated phone system and redesign the company website.
3 Build a Plan of Action: - record all data from the above analysis. Create a plan of action and includes the distribution of time to implement it.
4 Implementation: To implement the action plan, you will need these nuclei. Select core team consists of people present with you. Consider hiring professionals or trades as a manager or consultant. The core team of professional or business is important to implement the plan successfully. Invest time to learn the most appropriate team. Pay them the best salary and benefits. Interact with this team and give them a logical enough time to implement. Once a team is formed, never try to move them or change them. It is important that all team members should feel safe and invest their energy and time just for the Encyclopedia of the unit. Have full faith in their performance. Never discourage and treat these members as members of his family. Remember, this is just the first step towards success. Future steps will be automatically discovered by the core team.
5 Get feedback: - Device regular feedback system. Feedback is the result of the implementation plan. Look at that sends accurate, unbiased and only the truth.
6 Build corrective measures: - If you are sending is satisfactory, no corrective action is required. If you are sending is not satisfactory, build a corrective action plan. This plan is only a supplement to the plan.
7 Conduct. Now the basic plan and implement corrective action plan together
Repeat the cycle until you are comfortable with the gross profit ratio. In fact, you can never stop. It's like riding a bike wheel cycle, when to stop, you will fall. Business is like that only.
Remember, this is a proven method, but its success will depend on your and the Core Team's hard work, honesty and patience. Unable to get the right result is a re-structuring of the production activities of any unit.
You are welcome to contact the author for clarification or assistance.
This article was written by Subodh Sarkar dating: 8 October 2010
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