Page 74 - Paulisms: Gold Nuggets for Small Business

Paulism: KPIs are a simple but important way in evaluating the success of your company, individuals, processes or progress against goals such as budgets or performance criteria.
3.3 Profitability
3.3.1 Incremental margin – The theory of Paul’s Funnel
This is one of the most powerful tools or models for increasing your bottom line (profit) and to get through workload bottlenecks, but it may mean a paradigm shift.
So many companies I talk to cannot grow because they haven’t got the capacity, don’t want to take the risk of increasing their overheads or don’t want to employ more people for fear of work dropping off and having to lay off people. They are ‘stuck between a rock and a hard place’. Their business doesn’t have the capacity to take up the opportunity that exists and they fear the risk of frontloading capacity (employing people before work is actually there) and resourcing for scaling up. Alternatively, they fear they may have orders which they can’t cope with or will have a backload of a couple of weeks’ work. They simply cannot handle the business volume but they won’t risk it. Then you have the tradesperson or small business owner whose mindset is that why should they pay someone else at a higher cost when they can do it themselves and potentially get it done faster and pay themselves (see Part 2: Chapter 6.1).