The 1% Difference: Small Change-Big Impact

The

1%

Difference

Small Change-Big Impact

Murray Lyons and Kelly Lyons

AuthorHouse™

1663 Liberty Drive

Bloomington, IN 47403

www.authorhouse.com

Phone: 1-800-839-8640

© 2011 Murray Lyons and Kelly Lyons. All rights reserved.

No part of this book may be reproduced, stored in a retrieval system, or transmitted by any means without the written permission of the author.

First published by AuthorHouse 7/18/2011

ISBN: 978-1-4634-1254-8 (sc)

ISBN: 978-1-4634-1255-5 (e)

Printed in the United States of America

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Contents

INTRODUCTION

CHAPTER ONE

CHAPTER TWO

CHAPTER THREE

CHAPTER FOUR

CHAPTER FIVE

CHAPTER SIX

CHAPTER SEVEN

CHAPTER EIGHT

CHAPTER NINE

CHAPTER TEN

CHAPTER ELEVEN

EPILOGUE

INTRODUCTION

Business is about creating value and generating profit. If you know how to do this, you become more valuable, not only to your present employer but also to future employers. The bottom line is that employees who create value are valued.

Every day employees make decisions that ultimately get reflected in the financials. In many businesses, sales reps exert the most impact on the financial success of a business because their decisions directly affect the most important line on the income statement—the sales line—however; other employee groups can significantly influence financial results. Purchasing affects costs of goods sold; managers, supervisors and employees affect expenses; other employees affect the utilization of assets such as inventory, receivables and fixed assets; and everyone affects productivity.

In order to understand the economic value you create, you must first have a basic understanding of how your decisions are reflected in the financials and the multiplier affect of those decisions. The universal language of business is money, so it is to your advantage to have strong business skills, financial acumen and a clear understanding of the profit drivers and profit leaks in your business.

You may be saying to yourself, I’m just one person; what difference can I possibly make? or One percent doesn’t make a much of a difference, so why bother? Most of us believe senior managers and special teams make the decisions that really make a difference and to a certain extent they do. Furthermore, concepts like re-engineering have taught us to go for the home run and be less concerned about smaller day-to-day decisions. A natural outcome is to believe that the decisions we make everyday are insignificant in the overall picture.

The good news for people in business is that a mere 1 percent improvement in key variables they influence every day can have a huge impact on profitability in a very short period of time. You do not have to make significant investments or wait years for the result. You do not have to create teams and initiate projects nor do you have to add any work to your current workload. You can make a difference today and start to see the results by month end!

So why don’t we hear more about this amazing principle? Because we have been conditioned to believe that 1 percent is too miniscule to matter and that hitting a home run requires a new product, new markets and new technology, which, of course, is someone else’s responsibility … but nothing could be further from the truth!

In most organizations, a mere 1 percent improvement in the choices employees make every day can improve net profitability by 20%-100%! Even better, most employees feel they can easily make 1 percent improvements.

Why is it important for your employer to be profitable? Why should you focus on helping the business to make more money? These are legitimate questions, which we answer in the following way:

1. Profitable companies offer more security, something we all crave;

2. Growing and profitable businesses create opportunities you might be interested in;

3. Employees who know how to create positive financial results become more valuable to both current and future employers (that’s a good thing for you!);

4. Companies always need people with strong business skills and financial acumen. These skills are in short supply and therefore can be a competitive advantage for both you and your employer;

5. If you manage, run or own a business, these skills are invaluable.

The 1% Difference is not a book about accounting or finance. It’s about how companies make money and generate profit. If you are in business and want to create financial value, this book is for you!

Murray Lyons

Kelly Lyons

CHAPTER ONE

As it did every month, the 9x12 envelope arrived on Dave Kirkpatrick’s desk a few days after month-end. No doubt, Cole Stevenson from Accounting had dropped it off before leaving for the day. The label on the front read December Results. A look of discouragement crept over his face. His stomach started to knot.

The damp winter cold and grey Seattle rain heightened his gloom. Outside, the rain was falling, as it often did in the middle of winter in Seattle. It was seldom cold enough to snow, but you couldn’t escape the dampness. Visitors from colder climates often felt chilled, even though the air temperature was warmer than most northern states.

Kirk, as most people called him, peered at the envelope as it lay on some papers in the middle of his desk. After years of selling, he had mastered the skill of outwardly putting a positive spin on everything. It didn’t matter how good or bad the results were; whenever an outsider asked how business was, his answer was always the same—Great! Privately, though, worry and anxiety were the order of the day. Business was anything but great and he had lost confidence in how to initiate a turnaround for the business. He was scrambling for solutions, but nothing seemed to be working.

Piles of paper were scattered throughout Kirk’s large, well-lit corner office. The computer hadn’t stemmed the flow of paper one bit. On the contrary—there seemed to be more reports than ever. He leaned back in his chair, wondering how much longer this could continue. As the Branch Manager, he was ultimately responsible for branch results. Certain the report in the envelope contained little good news, his stress level soared.

Despite his best efforts, results were trending lower. Long gone were the days of high margins, growing sales, profitability and year-end bonuses. Over the past ten or fifteen years, business had changed significantly and would never be the same. While some companies prospered in this new environment, Kirk’s employer, Belton’s Distribution (BD), had faltered to the point where Kirk now felt that his most important career goal was simply keeping his job. The beginning of a new year was a time for change and the probability that he would be let go had just increased with the latest results. Even in a booming economy, his employment opportunities would be limited. At fifty-five, with a track record that had deteriorated for three consecutive years, Kirk knew time was running out. How times had changed since the days when he could effortlessly land a job at almost any distribution company!

BD was a family-run business with offices in six Pacific Northwest locations. The company had three main product lines—cleaning supplies, paper products and packaging materials—and distributed thousands of products. Some of their customers were retailers who resold the products to end consumers while others such as building service contractors, printers and offices used the products in their day-to-day operations.

After starting the