9 Questions to Ask Yourself Before Beginning a Profitability Enhancement Analysis
Posted by Mike Emmons on Jul 23, 2020
In a recent blog, we uncovered the truth about the significant differences between conducting a profitability enhancement analysis with an internal team versus hiring an outside consulting firm. Generally, you will find that a third-party consulting firm is capable of providing more visibility into your markets, competitors, peers and industry best practices with new data and information, while also increasing the speed and efficiency of the project, expanding the scope and depth of the analyses, and equipping your teams with a unique perspective.
As you consider the differences between these two approaches, there are some important questions that you should consider before making a final decision on the approach that will be the most effective prior to embarking on the journey of conducting a deep dive profitability enhancement analysis:
1. What is the scope of this project? What is our strategy? What are the objectives? Yes, we are trying to improve profitability, but where are the opportunities and how do we effectively identify these opportunities and execute a plan to realize any results?
2. What type of data and information needs to be collected?
3. Should we include critical data and information about our markets, competitors and peers in our data analysis and matrix for decision making?
4. What is the process for collecting this data? How difficult and time consuming will this task be? And ultimately, will we be able to collect all the necessary data and information to incorporate into our analyses?
5. Who will be responsible for collecting the data and how will their normal responsibilities be impacted?
6. Do we currently have a methodology in place for analyzing the data and information that we collect? What set of criteria will determine which data and information is relevant or irrelevant; and how will we convert this information into meaningful, actionable intelligence?
7. How will we quantify our recommendations? Who will be impacted by the changes?
8. Do we have a methodology in place for implementation and for measuring the actual results for any recommendations approved by our leadership team?
9. What is our goal on this project timeline? Can we effectively and efficiently conduct a comprehensive profitability enhancement analysis, from beginning to end, with our internal resources in a timely manner? Could we benefit from partnering with an outside firm? What is our time worth? Is time value of money a consideration? What is the value of third-party expertise and perspectives? Which of these approaches provide the better ROI?
If you want to learn more about the truth behind these myths, check out our Profitability Enhancement Playbook, a 3-step guide to increasing your profitability and improving your efficiency ratio by leveraging competitive intelligence and business intelligence to optimize income, enhance operational performance and productivity, and minimize costs.
Vice President Hometown: New Port Richey, Florida Alma Mater: University of Central Florida
Sports fan, specifically the Tampa Bay Buccaneers. Dog lover – has three large dogs, name Gullah, Poochy and Capri. Favorite food, hands down, is pizza.