Over recent years I have written a number of applications for various awards throughout Australia. But it wasn’t until I started looking at the eligibility criteria for the individual awards that I realised how different the judging process was and what was considered successful for each award.
Many of the award applications are based purely on financial performance, typically just on revenue growth over the previous three financial years. Some ask for more details around EBIT and profit, and there are others that are a lot more extensive and comprehensive and also take into consideration what the owners/key personnel have taken from the business both as salaries and as dividends, whether government grants had been received etc.
What I find interesting about this is that with some of these awards, companies do really well and there is this perception that these companies are extremely successful because they have very high revenue. However, what some of these awards fail to recognise is that the cost of sales for these companies are also very high, so their actual EBIT and profit margins may only be around 1-2%.
I consider a successful, sustainable business to be one that excels in all areas, not just financially. In my experience there are very few awards that recognise success across all areas of your business. Ironically when you achieve this, you will typically find that the financial results will reflect this and you will be able to achieve results of an EBIT of above 30%, or even 40%!
When you look at the numbers and the time and effort you invest into your business, would you rather be earning 2% on $20million ($400,000) or 35% on $2million ($700,000)? I know which one I would prefer and which one I consider more successful!
So whilst I think awards are a great way to recognise just how far you have come and they provide a great benchmark for your business. We need to remember that many of these awards only focus on a specific area of a business and if you really want to work towards building an even more profitable, sustainable business you need to work on all areas of your business. This means all pillars that include the following:
- Financial/operational sustainability
- Systems and Processes
- Marketing and brand
- Client satisfaction
When you are truly successful as a business, you are kicking goals in all of these six pillars rather than driving revenue or one of the other measures to the detriment of the entire business.
A successful business is a balanced one that drives the right behaviours and focus in all! Watch your indicators and measures trend towards high performance!