Why Are Many Attempts to Improve Profits Like a Chinese Finger Trap?

The harder you pull on a Chinese finger trap, the tighter it gets and the harder it is to get out of.

The things many companies do to increase their profitability usually have the same result as a Chinese finger trap – they make the problem worse, not better.

Pushing a finger lock together loosens it, and makes it easy to get out of.

Improving profits rarely involves simply selling more. To be successful, numerous factors need to be involved.

One example is a client who led the spring water field but struggled with its “value brand,” which was neither high volume nor profitable.

An individual I placed pointed out that the competitors, Desani and Aqua Fina, were selling tap water bottled locally, while my client was selling spring water that needed to be shipped long distances, putting their brand at a cost disadvantage.

A pilot plant that emulated their competitors was a great success, spurring the company to switch its plant location methodology for their “value brand.” As a result:

• The volume more than doubled in five years.

• The company saved millions of dollars by not purchasing unnecessary water rights.

If your profits are not what you think they should be, the reason may be that your finance people are not giving you enough information to make choices which will maximize profits.

Feel free to reach out to me if you want to discuss what finance can and should be doing for your company.

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