How To Increase Profit And Grow Your Business
CEOs, presidents and business owners will often call to discuss how to increase business profits. It’s important for anyone running a business to work at increasing business revenues.
Your business either goes forward or it goes backward.
I explore with CEOs, presidents and business owners the possibilities of increasing their business by asking a series of questions to determine if the company is ready for growth.
Here are basic, initial questions every CEO, president or business owner needs to contemplate:
- Am I doing everything I can do to get the most out of my business?
- Are all my employees being productive?
- Am I selling the right products or services?
- Am I operationally sound?
- Do I have both a business plan – and a marketing plan? Was it reviewed and updated recently?
Here’s why these questions and many more like them are important.
Let’s say you own a company that does one million dollars in annual revenue. From the outside your company seems to be well run. You’re paying all of your bills. Paying yourself. Payrolls are never late. Making a 5% profit. So over and above all of your expenses you are making $50,000 a year profit.
You think to yourself: “If I raise my volume to $1.5 million, I’ll actually be making more money”. But that may or may not be true. To get the additional volume of $1.5 million you may need: more space, more employees, more inventory, more vehicles, more office supplies, computers and experience just more expenses, in general. When you work the numbers at the end of the year you may find that instead of making more money you actually lost money because with the increase in sales also came increased costs and you didn’t do enough sales to increase your profits.
So let’s take another example.
You’re doing one million dollars a year. You start to really evaluate your business. Making a goal of only being 5% more productive. Same people. Same expenses. Same everything. Except 5% more productivity. Instead of losing money; instead of making $50,000/year profit, you are now making $100,000 profit on the same volume. There are very few companies that cannot increase their productivity 5%. What if you could reduce your expenses an additional 5%? You would now be making $150,000/year profit with no more volume just a lot more careful business planning and execution.
Let me be clear about this: I am not talking about overworking your employees and creating a hostile work environment. I’m just talking about being more focused, creating a solid, realistic business plan with realistic goals and just working a little smarter.
After you have accomplished re-examining your business and made it as profitable as possible, now let’s talk about growth. Manage and control the growth in the same way that you’ve made your business extremely profitable and you will be extremely successful.
For more tips, ideas and insight into how to increase profit and grow your business, listen to my Blog Talk Radio show, Talk Business With Howard every Wednesday at 11 AM/ET. This week’s show topic: How To Increase Business Profit. The replay link is at the top of this blog post.
Have a business question or a topic you’d like to hear discussed on the radio show? Just post it here for consideration. Thanks for listening.