• Leonard Brecken

Importance of Resource Mgt Planning

Resource management is the precursor to profit management in that you can't do one without the other. Meaning you can't maximize the most you can earn from your company if you don't efficiently manage your resources. Business owners allocate their resources everyday, but mostly qualitatively vs quantitatively. In other words, they fail to quantify why they allocate resources they do. Instinctively they make decisions based on things in their head vs what's on paper. Some do of course but most I talk to don't at least completely within a formal plan.


To properly allocate resources you must measure their Return on Investment (ROI) when allocated and after. Before explaining ROI, first let's define what we mean by resources. Broadly speaking they are the following (realizing there are more but focusing on these):

1) MONEY

2) TIME

3) CAPITAL

4) ASSETS

5) LABOR

6) MARKETING


By making decisions on resource allocation that are rooted in ROI, business owners can begin to enjoy higher profitability regardless of whether you grow revenues. That's not to say by implementing a resource plan based on ROI won't increase revenue growth too. Using MARKETING as an example most business owners deploy some form of marketing, but most never require the firm they hire to quantify the ROI on that money spent nor tie it to profitability. First, the money spent needs to be funneled into products & services that generate the most profits for the company or those that have the potential to. Further, those that the company has a competitive advantage would likely lead to the highest revenue & profit potential. Leads or clicks are nice but if they aren't converted to actual profits what good is the marketing? Blanket marketing to build brand maybe worth while for larger companies, but for smaller one most don't have the resources. Thus, they must be focused on those products that will return the highest ROI & profits.


So what is ROI and how is it measured. Simplistically, its money generated from the resource you are investing divided the total amount invested. Resources like LABOR & TIME need to be translated into monetary value of course. To measure this a system must be in place to capture the necessary data and you must measure, monitor & analyze the right data.


Creating a resource management plan that is based on ROI is the core of what we do. If business owners follow such practices they will not only be more profitable for the same amount of revenues, but also grow faster. Come talk to us at TheProfitConsultant.me on creating & implementing such a plan thru our 5 Step Process. As a reminder: "We don't get paid unless we increase your profits".


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