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The Number 5 Is The Answer To More Business Profitability


Generally, when CEOs, presidents and business owners think about growing their business and making more money, the vision is one of significant growth. But that may not be the answer. With significant growth, also comes significant expenses which can potentially decrease business profitability.

One of the ways that business people get themselves in financial trouble is they start to grow their business and don’t realize the cost of growing that business. For example, if you’re doing 1 million dollars in business and grew the business to 1.25 million dollars, instead of making money you may be losing money. This would cause yourself considerable, additional stress by adding significant cost to your company’s break even point.

Growth needs to be added in a thoughtful, strategic way so that growth is profitable. Think about it this way:

  • On 1 million dollars in sales, if you only reduced your costs or became more efficient just by 5% you would add $50,000 to the bottom line.
  • If you only increased your sales so you were getting 5% more profit you would add another $50,000 to the bottom line.
  • So you can see, when you are talking about growth and profit, don’t make the mistake of just thinking about growth. Think about how to grow in the most profitable way.


Let’s explore this further…

As mentioned above, if you reduce your costs by 5% you would add $50,000 to your company’s bottom line. Keep in mind that you don’t want to cut just to cut to get the 5% reduction, you want to cut waste and inefficiency. Look towards how to increase productivity. In every business, no matter how well run, there is waste and inefficiency plus a certain lack of productivity. Because every business is different, take some time to study your business with objective eyes.

It should be relatively easy to add an additional 5% profit to your company. Here’s how:

– Always be thinking about how to be more efficient.

– Frequently review your business plan.

– Be constantly thinking through the sales and marketing process.

– Improve the sales force. Update sales techniques including customer relationship management (CRM).

– Have the best customer service possible.

– Look for the most effective ways to reach customers or clients.

– Offer products that bring better value and at the same time more profit to your company.

Here’s one more point to consider that you may not automatically think about: price increases.

Think: Business profitability!

Take a look at what things are costing you this year compared to what they were costing a year ago or even two years ago. You may find you need to increase your prices. There isn’t a business person in the world who wants to raise prices and take the chance of losing a customer. If you don’t keep up with inflation, in a few years you’ll find there’s no choice but to raise prices significantly just to remain in business.

This is where customer service, maintaining solid business relationships and value come in. If you don’t consistently give excellent, dependable service. If you don’t have a good business relationships; if you don’t provide value, then the competition will take the business away from you!

Remember: The reason you are in business is to make a profit.


To your success!


Want to increase business profitability at your company? Talk with Howard! – 888-738-1855 – Howard Lewinter guides – focuses – advises CEOs, presidents and business owners to MORE success – MORE profit – less stress.



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