Is there a single formula for business success? Generally, people will tell you there is no one formula that will guarantee business success.
Well, at the sake of sounding too simplistic, I argue there is.
( P * R ) – C = G
It doesn’t look like much, and with respect to my financial and operational colleagues, everything you need to worry about to make your business successful is in this formula.
I’m sure those of you with any kind of financial background have figured out what this formula is.
- P = Productivity Rate (per unit of time)
- R = Revenue (per unit, per unit of time)
- C = Cost (per unit, per unit of time)
- G = Growth Capability
Now, you’re probably thinking, “You were right, Scott, that is too simplistic. Oh, and by the way, the formula is wrong; it’s R(evenue) – E(xpense) = P(rofit).”
Focusing on productivity rate is one of the greatest tools for a business leader. This is not about squeezing more “blood out of a turnip;” rather, it is about creating a greater production capability that works today and continues in the future.
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