Ever wondered what the Profit Stacks Framework really is? Greg Clarkson goes into more detail on how it can make a difference in a business.
So the five areas of the profit stacks framework came out of the last 20 years of experience that we’ve been having working with businesses. It’s come out of the challenges that businesses are talking to us about and we decided that we could probably group all these challenges that business have into these five areas.
The five areas are, we start with the sales stack. So the sales stack is really focused on customer acquisition and the process of doing that.
Examples of activities that might be included are things like lead generation, how you acquire inquiries, how you nurture your inquiries, which is like an outbound process, how you quote, how you actually close a deal and move it across into an ongoing relationship with that business.
It’s flexible so that we get to define what is the sales process that works well for each business. So this is just an example of activities that might be in there, but it could be something else and then another activity we talk about is the people stack.
The people stack is all about everything that makes your people productive and excel in your business. So covers aspects of your teamwork. It covers HR hiring and firing. It covers commissions and compensations but it also covers teamwork aspect like communication, how people collaborate, how knowledge sharing is happening in your business.
The production stack or the operation stack is actually what you produce. So when you make a promise to a customer that you’re going to deliver some value then in the production stack is the value that you give them. So for a service based business tt might be around requirements gathering, producing a report and then getting feedback on that report back from the customer and that would be the activities.
For another business that’s a food processing business it might be acquiring the raw materials, putting them together cooking them and then shipping them or putting them on the plate for someone.
For some businesses, you can have multiple production stacks for each line of products that you have and there is flexibility there but we just call it one production stack.
And then the finance that covers all the aspects of understanding the profitability of your business, which covers the invoice, the revenue aspects of generating invoices, collecting payments and also managing your debt which could be receiving payments, but also negotiations with banks and finance of loans. Typically people want to know their profitability per product, ideally per staff member, per client and the finance guy could deliver in the system that can do that for you.
And then we have a fifth step called the structural stack or you could also call it the strategic stack and these cover the activities that either protect what you’ve got, like, risk mitigation activities like insurance that you’re protected from cyber-criminal activities, but it’s also innovation, developing new products, R&D, competitive analysis, knowing what’s out there in the marketplace.