Yes, increasing your profitability by up to 150% is entirely possible and whilst increasing sales price and decreasing cost price is one sure fire way it’s not always that simple and there are other ways.
If you are a startup or have been running your business a few years, the guidelines below will help you take control of business, your day and your profitability once and for all as I show you how to increase your profitability by up to 150%.
Whether you are starting your journey now or have managed to surpass the fabulous five years in business, you should know one thing and that is what is your ultimate goal. Without a goal you will never achieve your dream business (nor in fact your dream life) as you have not defined it. Imagine a football pitch with no goal - it just does not work.
In reality you will set more than just one goal but the ultimate goal is the one that all the others point to and without it you are unlikely to achieve your full potential.
So you know what your ultimate goal is and you may have also set some smaller goals, so what comes next is a plan. Think of your plan as like mapping out a journey around the world. You need to know where you start, your destination, any stopovers you need to make and of course the transport you will take to get there.
Just like a journey your business needs a plan too. You need to analyse where you are now and then using your goal you need to set out the steps you need to take to get there. As a minimum this will involve creating a budget which ideally looks at profit and cash flows plus some form of narrative to go with it.
This step is probably the hardest as it may feel a bit like educated guessing (which it is) but it is such an important step. At this point I would also include research into your market to make sure your ideas are feasible and that your potential clients will buy what you are offering. It’s all very well having a great product or service but without people buying it, your business will not survive.
Also think about the systems, processes and people who will support you in that business. You may have the ideas but often going it alone can prove a fatal mistake.
So you have your goal and your plan, but now you need to do something with that - you need to take action. Plus when I say take action, this needs to be MASSIVE action but at the same time, the right action.
Your goals and your plan are paramount here as you need to make sure the action you are taking takes you in the direction of your goal. Always ask yourself ‘am I doing the best thing possible with my time right now?’ and if you are not, change what you are doing.
It’s worth mentioning that as you take action, acquiring time management skills is a huge bonus as it will stop you from spending countless hours on irrelevant work which actually gets you nowhere. Remember the saying ‘a busy fool’.
By now you should be taking massive action towards your goal and in order to remain effective, you need to review regularly. At this point there are some key questions you need to ask yourself to stay on track, I have listed a few basics just to get you started…
Is my goal still valid?
Am I inline with the plan and if not what are the variations?
Does the plan need changing?
What adjustments do I need to get back on / stay on track?
As you ask these key questions have to hand your original goal and plan but also figure out where you are right now. Financially this means you need to know your numbers and review your ‘actual’ results with your budget. Ideally this should be done monthly but can be dependant on the size of the business.
Yes without wishing to repeat myself you need to constantly repeat, repeat repeat. Building a business is not just about starting at A and moving directly to Z. Along the way there will be twists and turns, ups and downs, that’s life and in all honesty part of the fun of running a business. So set this up as an ongoing process because in doing so you will always know where you are, where you are going, how to get there and when to take a detour before getting back on track.
If you have a goal you are more likely to be focused on the end result. If you focus on the end result as opposed to being distracted, the probability of success is higher and you are most likely to get there sooner. Profits will therefore increase in a shorter timeframe.
If you make a plan you will have done your research. You will put in place the right systems, processes, people, funding and other variants to achieve your goal. In doing so you will be more effective and will be able to negotiate better deals because you know what you need to do
As soon as you take the right action you will move towards your goal. You will use your time effectively and you will be able to make quick, informed decisions. All these will increase your profitability.
By reviewing and adjusting you are taking ongoing responsibility for what happens as opposed to what you thought might happen. If you do this you can take advantage in prosperous times and manage the more difficult times because you know the difference. Being ahead of the game allows you to keep control and will affect your profitability.
Nicky Peters works with entrepreneurs and small and medium (SME’s) business owners and specialises in increasing profitability.
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