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It is no secret that money challenges are all too real for many small business owners. Many small business owners have one or more of the following situations going on; weekly fears of meeting payroll obligations for staff, don’t have enough funds in the bank to pay themselves a consistent monthly salary, seem to always be in overdraft, have lots of money owed to them, turnover at an ok amount but never have any profit left at the end of it all.
As far as small business strategy goals, increasing your business’ net profit is a solid one! Why? It gives you, the business owner, more options. Let me ask you this question; if you selected a number of methods for increasing your net profit and actually implemented them, would it be possible to increase your business’ net profit by $50,000 or maybe even $200,000 in the next two years?
Does price matter? Heck yes! If you’re a small business owner, when was the last time you reviewed the impacts on your profit from increasing prices vs discounting. Not a price review “should I put my price on product A because my supplier has put the price up?”, I’m talking about a Price Increase vs Discounting Strategy Review. What are the impacts to your business if you run that 20% sale vs increasing prices by 10%? Which one will increase your Net Profit?
If your small business has cashflow problems, i.e. you are finding it hard to keep up to date on payments to employees, suppliers, or yourself, then it’s time to identify the cause of the money and cashflow problems so you can set a clear action plan to solve the challenge.
Small business owners are always looking for ways to increase profit. When I ask the question, “would you like to increase profitability?”, rarely do people say anything other than “yes”. If you’re in business, profit is one of the most significant measures of success.
Overview: Learn a simple 5 step process designed for small businesses to increase profitability
If you know all three figures, and the associated costs, you can work out your true Gross Profit for each to determine whether you own a business or a stressful charity. Figure out which jobs or projects you always make good "Actual" margins on and can "Invoice" the same amount so your "true" margins are good, if you can do this you will know which jobs to say yes to and which to say no to. It will also give you direction and focus to drive your business forward.
If You Own A Service Based BusinessThen You've Got To Be Measuring This...
Have You Put Your Figures Through This Model To Find An Extra 17.4 - 41.4% in Net Profit?
Are You Making Sure Your Business Is A Profit Machine By Using These 3 Simple Tools?
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