Determining Your Firm's True Economic Driver
As long as kitchen/bath firm owners stay true to what their passion is, what they do best in their marketplace and what their Key Economic Driver is, they will outperform their competition.
The average Net Profit of the 13 kitchen/bath firms in their best years was $257,000.
The average Gross Profit $/Payroll Expense Factor was 2.211 in these firms’ best Net Profit years.
There is a compelling 92% probability that a kitchen/bath firm’s Key Economic Driver is, indeed, Gross Profit Dollars/Payroll Expense.
An Economic Driver Goal of 2.200 should be embraced as the most critical benchmark with all business decisions being made – such as budgeting, new profit center opportunities, etc – to insure a maximum Net Profit for kitchen/bath firms.
In keeping with the findings of the research documented in Good To Great, kitchen/bath firm owners going forward would be wise to make certain that all their business growth endeavors fall within the intersecting circles as shown in the graphic at bottom, left. Collins and his research team referred to this dynamic as “The Hedgehog Concept.” As long as kitchen/bath firm owners stay true to (1) what their passion is, (2) what they can do best in their marketplace, and (3) what their Key Economic Driver is, they will outperform their competition many times over for a sustained period of time, making a lot of profit in the process.
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