Profit Blog

Jarmo Manninen & Muutosdraiveri Oy


Why is knowledge of the starting situation the basis for planning a company's change needs?

21. maaliskuuta 2025

The prerequisite for developing a company's profitability is that you know the STARTING SITUATION, i.e. how the company's realized profitability figures and the number of deliveries are distributed by product and service. Since profitability is definitely the most important key figure among the company's performance figures, in the following I will focus on examining the company's business change needs from the perspective of profitability.

If you do not know the STARTING SITUATION of your company's change needs, the following problems will arise:

1. When you do not know how the company's realized profitability figures and the number of deliveries are distributed by product and service, you are not in a position to make strategic decisions about the direction in which the company's products and services and their offerings should be developed in the future, so that the company can achieve its strategic goals.

2. When you do not know how the company's realized profitability figures are distributed by product and service, then you do not know the actual cost of production by product and service, the cost structure, or the sub-costs of the cost structure.

3. When you do not know how the actual product-specific and service-specific profitability and delivery volumes differ from each other and you do not have concrete, data-based grounds for determining how much product-specific and service-specific profitability must be improved and delivery volumes increased in order for the company's need for change to achieve its profitability goals.

4. When you do not know how much their profitability needs to be developed and delivery volumes increased per product and service in order to achieve the profitability goals of the company's need for change, you are unable to determine how much their delivery volumes need to be increased per product and service in the company and how factors affecting profitability, such as price increases, cost reductions and operational efficiency increases, need to be implemented in the company so that the profitability goals of the company's need for change can be achieved.

5. When you lack the information I presented above, you do not have information-based bases to draw up action plans on how their delivery volumes need to be increased per product and service in the company and how to develop the company's products and services so that the profitability goals of the company's need for change can be achieved.

6. When you lack the information, I have presented above, in a possible adjustment situation of the company you will not be able to make sufficiently accurate action plans for the changes required by the need for adjustment, for example in the company's products and services, functions and operations. In practice, this means that you only have at your disposal the company's actual income statement, in which you divide the target figures for the company's need for change line by line and GUESS how they will change the company's operations. If the company operates in this way, then based on my experience, it is impossible for the company to plan the results of the adjustment in a sufficiently accurate and sustainable manner. Adjustments made in this way have almost always led to new adjustments, i.e. an adjustment cycle, which of course is not in anyone's interest. In the worst cases, the adjustment cycle has driven the company into bankruptcy.

7. In practice, all of the above means that you do not have the prerequisites for the company's financial management in place, i.e. YOUR MANAGEMENT IS ONLY BASED ON YOUR GUESSES. In addition, all of the above means that YOU DO NOT HAVE THE CONDITIONS TO LEAD YOUR COMPANY SYSTEMATICALLY AND TOWARDS CONCRETE GOALS AND YOU HAVE TO RELY ON INDEFINITE EXPLANATIONS OF WHY YOU CAN ACHIEVE THE DEFINED RESULTS GOALS WITH YOUR MANAGEMENT. In this case, the company is not managed, but the company's results are driven by coincidences.

All of the problems I have described above can be avoided when you have a known STARTING SITUATION as the basis for planning the necessary results change in the company. It is too often said that the GROWTH of a company's business is the best solution to achieve the company's results goals. The fact is that only with PROFITABLE GROWTH CAN A COMPANY ACHIEVE ITS RESULTS GOALS and WITH UNPROFITABLE GROWTH, A COMPANY WILL BE FILED FOR BANKRUPTCY.

I encourage you to share this blog post of mine on social media. If you have any suggestions for the topics of the next blog posts, I will gladly accept them.

I hope that you were interested in this matter and that you can continue to be involved.

I have written four books on creating the conditions for the company's financial management, and they are available in well-stocked bookstores and online bookstores in Finland, for example from BoD (Books On Demand) at:














Share this article

Recent posts

24. kesäkuuta 2025
When a company first encounters a situation where the company's cumulative profitability targets are not being met, the company should use its own resources to create a concrete action plan of corrective measures and implement it in such a way that the company will achieve the company's cumulative profitability targets within the specified timeframe. If the company is unable to achieve the company's cumulative profitability targets within the specified timeframe, the company should seek the right kind of external expertise with the right kind of agreement to remedy the situation.
17. kesäkuuta 2025
In my opinion, the basis of a company's business should be that everyone in the company must do their job and fulfill their responsibilities in the company so that the company's goals are always achieved. If a person's best effort is not enough, then they must be able to do better, either on their own or with the advice of someone else. If a person's own abilities are not enough to achieve their goals, then everyone is obliged to ask for help from their superior. In turn, the superior must always be obliged to either help in the situation in question, either by helping themselves or by arranging help. It is not enough that everyone has the right to ask for help from their superior in a situation where doing their best is not enough, but everyone also has the obligation to use this right without unnecessary delay. In this case too, wasting time will not fix the problem; rather, wasting time unnecessarily multiplies the problem. In well-functioning companies, a person can always ask for help from their colleagues if necessary. The idea behind helping someone is not that the helper's job is to do the work for the person being helped. The idea is that with the help of the helper, the person being helped learns from the help they receive so that they can achieve their goals after this situation without the helper. By doing this, the latent abilities and creative ability of people to find new solutions are put to use, which has proven to be a very significant potential in my experience. In order to achieve this in a company, the company's work culture must be able to be developed to be positive and encouraging, and such that problem situations are not hidden in the company, but rather they dare to bring them up as soon as they arise.
10. kesäkuuta 2025
A company's work culture tells you how the company operates. In other words, a company's work culture tells you about the ways of operating in the company. A good work culture promotes the commitment, motivation, productivity, job satisfaction and well-being of the company's people, while a bad work culture typically leads to dissatisfaction, high turnover and poor performance. I have visited hundreds of companies. When you walk through the door of a company and observe the activities in the company for a moment, this already gives you the first impression of what kind of work culture the company has.