34 MAY 2018 • FOGHORN BUSINESSMATTERS EASY MANEUVERABILITY Give your passengers a smooth ride with reliable John Deere PowerTech™ propulsion and generator drive engines. With high torque and low-rated rpm, they deliver excellent vessel control and quiet operation. For easy navigation on the water — Nothing Runs Like A Deere™. JohnDeere.com/marine 60 to 559 kW (80 to 750 hp) Highly Functional, Galley and Foodservice Environments New Builds, Remodels and Retrofits Galley Design and Sales 1813 130th Ave NE Suite 220 Bellevue,WA 98005 p: 425.881.1010 www.galleydesignandsales.com G•D•S 20180003D_GDS_B&W_Ad_MP3.indd 1 1/4/18 9:40 AM what the budget was, and it took them ten minutes to find the binder (another problem – the budget wasn’t printed on the financial statement) and they finally were able to tell me it was $550k. I then asked them how much revenue was generated in the same month last year. After more research, they determined it was $575k. We were forced to ask ourselves, why was this a big month? (I remember maybe three things from en- gineering school, but in the first week one class focused on the rate of change between two numbers.) About the Author Bob Shaw is a veteran industry executive, having led over 100 vessels responsible for over 10 million passengers a year. He can be reached at shawrw@gmail.com. Strive for operating leverage. Believe that every day, every situation and every opportunity can be improved. The universe tends to disorder, and we seek to constantly counter this in our lives and our businesses. A powerful tool is understanding your operating leverage. Compare the difference of actual sales and bottom line to either your current budget or last year’s figures. Let’s look at an example: In this example, you can see that the “Operating Margin %” (percent of profit divided by sales) increased in one year, jumping to 6.6 percent from 5.0 percent. But – more importantly – we can also see that profits went up by $20, on $60 of new sales, which translates to an operating margin increase of 33%. Looking at the Operating Margin percent line again, this means that in 2018, operating margin percent increased by 33 percent, from five percent to 6.6 percent. That’s Operating Leverage: a 33 percent increase in profits on a six percent increase in sales. Ingrain this concept in your team and they’ll be focused on (1) growing sales to be much greater than costs and (2) propelling your bottom line. Jack Stack’s The Great Game of Business and Verne Harnish’s Scaling Up! are two great books that can help teach financial literacy to your team. Verne also has a terrific one-page weekly email about business topics. These resources are chock full of easy concepts to implement on how to do the “gamification” of business for success. Engage your brain and don’t overly defer to the “experts.” And if you make sure everyone understands the key numbers, you’ll be amazed at what your team can accomplish. n