For years Tru-Cut Inc. employees would ask, "How's the company doing?" when executive Dave Gano walked the floor.

Today, Gano rarely hears the question. If he does, the response is always the same, "You tell me."

In 1999, Tru-Cut faced an uncertain future. The tool-and-die manufacturer had just closed down its special equipment manufacturing division. Two re-engineered divisions, stamping solutions and post-production services, remained.

Gano was implementing lots of changes-including open book management, so everyone would know exactly how the company was doing. "We just turned the whole company upside down," he says.

Whether confronting troubled operations, discovering too many surprises that are hurting the bottom line, seeing profits drop while revenues remain the same or grow, or simply wanting to increase profits, more companies are embracing a new perspective on looking at the bottom line. Profit enhancement is what it's all about, experts say.

"Efficiency isn't enough anymore," says Carol McNerney, a director at SS&G Financial Services, a Leading Edge Alliance firm, which advises Tru-Cut. "It's the extras that you bring to the table. Today's environment is so competitive."

The question is not as simple as asking, "How can we make more money?," according to Bob Charron, managing partner of Carlin, Charron & Rosen, a Leading Edge Alliance firm. "Ask more specific questions."

Donny Kretschmar, a director at Leading Edge Alliance firm Henry & Horne, says, "It's not just what you do every day, but how you work smarter. Everyone needs this no matter how big or small."

The profit enhancement poster child

Byron Hebert, a director of Leading Edge Alliance firm PKF Texas, says he worked with the "poster child" client who followed the profit enhancement path.

The owner of an elevator manufacturing company became concerned when the formerly profitable company saw its revenue flatlining or increasing marginally but found its profits eroding. On-time delivery was a concern, the owner told Hebert. But he wasn't sure how much it was costing the company.

So Hebert conducted a profit enhancement evaluation. He says that while the problem cutting into profits was on-time delivery, a systemic evaluation was needed-reviewing the process from the time the phone rang confirming the order to the time the product was installed.

What the investigation revealed, Hebert says, is that the sales department was promising unrealistic deadlines. The process then was complicated by design engineers who wanted to add bells and whistles. They often would send unfinished designs to production and told them to begin work while waiting for the final design. "However, a click-and-drag change by the design engineer on the computer might takes minutes, the change might take a half day in the shop," Hebert says.

When the elevators went out, they frequently were incomplete and required adjustments to be made on site. With an international clientele, the cost of sending employees to finish the work was costly.

Hebert says bringing a "fresh set of eyes" with "no political motive" offered him a chance to see exactly what the company was doing to identify the breakdowns that caused the late and unprofitable deliveries.

In the end, the sales department agreed to give clients deadlines set by the engineers and manufacturers. The company did not have to lay anyone off. The bottom line also saw a nice boost. Post-review, profits jumped approximately five times, Hebert says.

The pain factor leads to change

For Tru-Cut's Gano, profits were enhanced after he decided he could not bear the pain anymore of following an old business model. "I didn't want anything to do with it," he says of the closed approach begun with the company in 1968 that deemed only a few people understand the company's full financial picture.

"All the financial data was held close. Now we have Accounting 101 for all employees," he says. The 10-week interactive course is designed to help employees understand how the financials work.

The educational process doesn't end there. Employees are updated at weekly meetings in each of their divisions. Once a month, Gano hosts a "huddle" meeting to bring everyone together. He tells them the good and the bad. The idea, Gano says, is to engage all employees in identifying potential solutions.

Each division does its own sales and marketing. Meeting and exceeding the goals they set allow them to share in the distribution of profits.

Gano says he knows the open-book, take-responsibility-for-your-own work approach is not the best fit for everyone. When it started in 1999, some people decided it wasn't for them and left. "They didn't want to learn something new," he says.

But Gano never looked back. When processes are explained and quantified, it gives people a much better handle on their role in the company. "They're driving with their eyes open instead of closed," he says.

Almost six years later, Gano says profits are up and business is growing. In addition, the community is more aware of Tru-Cut and its approach to business. "In the last couple months, in interviews, more people are mentioning they have heard about Tru-Cut," he says.

The renaissance, as Gano calls his profit enhancement process, resulted in reduced overhead and inventory, which increased revenue and made profitability greater. It's a process he thinks all companies should consider.

"Just do it," he says. "Don't delay any longer."

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