SOURCE: Kay Sever | March 1, 2021
For decades, you have heard the phrase “leaving dollars on the table”. It means that an opportunity to make more money was missed… extra money that could have been made, but wasn’t. Executives and management teams may wonder how much money their companies are leaving on the table, but could not measure it. Let’s learn more about “dollars left on the table” and why they are important to consider if optimization is the goal.
Why are Dollars Left on the Table Unknown?
Your financial system contains dollars for business activity (what actually happened)… dollars for sales you made to customers, dollars you spent to pay your people and keep equipment running, dollars that you spent to fix problems and dollars you reported as profit.
Using numbers from your financial system, you report actual production but NOT production losses… net revenue but NOT lost revenue… actual costs but NOT avoidable costs… net income but NOT invisible losses already subtracted out. You manage budgets and projects that include losses you NEVER SEE! Millions of dollars can be hidden from decision-makers; as a result, it is even possible to meet budget and make a profit year after year while losing millions of dollars!
How can executives and management teams be unaware of this much missing profit? Because… the general ledger was NEVER DESIGNED to report them!
Dollars left on the table represent untapped earnings capability… missed opportunities that separate you from “best possible” performance, dollars linked to What’s Not Working, What’s Not Happening (but could be), What’s Missing, What’s Lost, and What’s Available But Hidden (capacity). These dollars are either missing from the general ledger or buried because of the general ledger structure, which is why leadership teams never see them. The good news is that dollars “left on the table” can be found, quantified, prioritized and used to convert profit potential to reported profit for FREE!
The Link To Optimization
Optimization implies that a company has achieved a performance level where profit has been maximized. If earnings potential can’t be tapped, profit can’t be maximized! With NO SYSTEM to track missed opportunities (dollars left on the table), these dollars remain hidden from management. When leadership teams CAN’T QUANTIFY dollars they forfeit, they CAN’T ACT to convert these losses to profit. If companies DON’T KNOW THE GAP between today’s performance and “how good they can be”, they CAN’T ACHIEVE “best possible” results, even with a huge investment in equipment and systems.
If you understood your hidden losses like you understand profit, executives and site management can gain new insights and information about performance, costs, goals, problems, expansions and optimization. Here are 15 NEW POSSIBILITIES with data for dollars “left on the table”:
- You would learn that problems perceived as “small” can be worth a million dollars.
- You could create urgency to fix problems that were overlooked, ignored or had low priority.
- You could use equipment losses to make smart changes to the way you manage assets.
- You would find production losses NOT CAUSED by production.
- You would know the true cost of delays and take action to reduce them in order of value.
- You would be able to perform “surgical” cost reduction to eliminate invisible cost overruns.
- You could evaluate the achievability of budget targets.
- You would feel confident about capacities when designing a plant or approving capital
- You might postpone expansions or avoid placing an expansion in the wrong place.
- You would learn that your organization CAN CREATE losses.
- Your people would have a hard time “choosing” to NOT work together to solve problems. 12.
- You could assign dollars to weaknesses in the organization and corporate culture. 13.
- You would learn how management interactions can result in unintentional losses. 14.
- You could have honest conversations about “what’s not working” in your company. 15.
- You could use loss data to open communications and build trust with your people.
Thought for the month: Millions of dollars of potential profit could be waiting to be tapped by your leadership team. All you need are numbers that reflect your upside potential and dollars “left on the table” that are yours for the taking.
Kay Sever is an Expert on Achieving “Best Possible” Results. Kay helps executive and management teams tap their hidden profit potential and reach their optimization goals. As the VOICE OF OPPORTUNITY in business, Kay has developed a LIVESTREAM management training system for Optimization Management called MiningOpportunity – NO TRAVEL REQUIRED. See MiningOpportunity.com for her contact information and several training options for your team.
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