Profit leaks lurk deep inside almost every service business, silently draining off hard-earned dollars. Nowhere is this truer than in a highly specialized service such as security. Some leaks are harder to detect than others; and some far more damaging than others. Together, they can form a major obstacle on the road to optimum profits.
Here are eight steps you can take right now to smooth out the path to a consistently healthy bottom line. While it may not be possible to completely bulletproof your operation, careful adherence to these management techniques will greatly reduce your exposure to unnecessary and costly losses.
1. Polish Your Image
Because of the highly sensitive nature of the security business, the element of trust tends to play a bigger role in the selection of a company than it might in most other types of businesses; thus, how do you go about polishing your image of trustworthiness?
Among the most important building elements in an image of trustworthiness is willingness to listen, which may not come naturally for most of us. Most people want to do more talking than listening; and although we may not be conscious of the reason, most of us feel comfortable in the company of that rare person who is a good listener.
Learning to listen well is not easy task. It takes a great deal of self-discipline but, from a professional standpoint, it is well worth the effort. We tend to trust people who are willing to take the time to listen to what we have to say; and we tend to trust people who seem to make a genuine effort to understand what we are saying. Sharpening your listening skills will go a long way toward building your professional image and plugging a potential profit leak.
2. Make Full Use of Banking Technology
Your bank would like you to pay your bills electronically, and they are making it easy and profitable for you to do so. Until recently, the idea was slow to catch on. Change does not come easily to most of us — especially when it comes to how we handle our money. Fears on the part of many about the security of paperless transactions added formidable hurdles on the road to a checkless society.
Lately, however, the sluggish stream of business owners viewing and paying bills online is becoming a raging torrent. At today’s cost of almost a half-buck postage for each check mailed, plus the cost of buying checks, the savings in money and time is becoming an irresistible lure to computer-savvy owners and managers. Service providers now offer a wide variety of easy-to-use systems, and experts say that security is a minor concern. Some experts claim that banking and paying bills online actually reduces the odds of identity theft by cutting off thieves’ access to the papers they need.
Improvements in technology and user-friendly Web sites make online bill paying almost as easy as logging on to check your e-mail. Check with your bank — chances are that it offers free online bill paying. You will be surprised at how easy and profitable it has become.
3. Hire with Caution
Of course, finding good employees up to your high standards is more difficult than ever. Still, your staff is the cornerstone of an efficient and profitable security operation. A single employee functioning at less than optimum and honest levels can wreak havoc on your business and on your bottom line. At the very least, check all references and do a search on criminal convictions before hiring. If you have any doubts or unanswered questions, do not hire that person.
When interviewing a potential new hire, take the time to listen. Do not make the mistake of doing more talking than listening. Make an effort to gauge the person’s ability to blend in with the existing culture of your operation and the personalities already on your payroll.
Increased turnover is only one of the problems generated by hiring the wrong person. A personality that isn’t comfortable in your environment can harm your business in ways that are far less obvious.
4. Concentrate on Human Relations
Once you have staffed your business with the right people, it is up to you to make them feel that they have found the right job. With all the daily pressures and stresses with which you must deal, it is easy to overlook the emotional burdens that lay heavily on your employees.
Favoritism, or even the appearance of it, can be a deadly enemy of efficient and profitable operations. An employee who feels that he or she is the victim of favoritism is likely to develop a grudge that can cause serious damage to your business. Make a special effort to show appreciation to your staff in a fair and equitable manner. The importance of skillful human relations in a modern business environment is well established. Even the appearance of a lack of respect for an employee can undermine your best efforts to develop a pleasant working environment.
Another common mistake made by some owners is failing to accept the blame when something goes wrong. A reputation for always putting the blame on others is a management deficiency that will eventually exact a heavy toll in the form of employee unrest. Being in charge means being willing to take responsibility for whatever happens on your watch.
5. Be Aware of Human Weaknesses
Despite the best of pre-hiring screening or the length of service of trusted staff members, human susceptibility to temptation will always be present, especially in a security operation. While your natural inclination may be to trust the people you hire, you should institute safeguards to minimize the chances of losses due to ever-possible dishonesty or simple carelessness.
Deposit revenue receipts daily, and make no exceptions. Make sure that a paper trail is created for every transaction involving the movement of cash. Be especially watchful over the system for handling petty cash. This is where embezzlement usually begins. If you have good reason to believe that someone may be stealing from you, report to the police at once. If you put off that unpleasant duty, you could be making it more difficult to resolve the problem.
6. Take Action on Marginal Employees
Discharging an unproductive or disruptive employee is the sort of unpleasant task that most business owners and managers dread; however, failing to take action when necessary can be a costly mistake. Keeping a problem worker around to create more trouble makes a bad situation worse — which is not fair to you or other employees. That can result in added stress on other employees who may have to take on more work, and dissension among those who cannot understand why you are keeping the employee on your payroll. This, in turn, can negatively affect the treatment of your customers.
In short, once you identify a disruptive or unproductive employee, it is best to face up to the unpleasant task of terminating the relationship. Postponing it can only lead to a more serious problem later on.
7. Mind Those Accounts Receivables
If you do any of your own billing, you must maintain good records of how much money your customers owe you. Whatever system you use to keep track of A/R, it must be capable of telling you whether any accounts are overdue by 30 days or more. If that comes to 10 percent or more of your total A/R, you need a more aggressive collection policy.
The more casual you allow yourself to become about collecting the money owed to you, the more casual your customers will become about paying you.
8. Watch those Bank Statements
Never forget that banks are in business to make money, and all of their income comes from customers like you. In today’s increasingly competitive environment, banks have turned to new and costly fees to bolster their revenue. Many of their charges are seemingly small and harmless; however, if left unnoticed they can relentlessly eat away at your bottom line.
That’s why it is so important to have someone responsible for scanning each month’s statement to ferret out charges that you can avoid.
William J. Lynott is a veteran freelance writer who specializes in business management as well as personal and business finance. For more info, visit www.blynott.com.
