Want To Double Profits Using New Discovery?

We’re already in 2017. One Houston small business owner I know sets New Year goals.

This year he wanted to double his profits. That’s what he decided.

I asked him how he planned to do that. And he replied: “I’ll take my revenue budget from last year and double that.” 

There was nothing uncommon about that thought. Except every one of his competitors would think that way. 

It makes more sense to see how competitors did the past year. And then set revenue goals based on how you’d like to rank versus them. One method uses industry benchmark ratios.

Such a step would give a more practical stance. You’ll at least know how you fared if you didn’t reach those goals. Because you’ve set them based on market. 

That’s what successful small business owners do.

It’s different if you’re a small business trying to make it. Set revenue goals to first reach your break even point. Break even point definition is the ratio of fixed costs to percent gross profit margin. Do a break even analysis and find out where you stand.

As revenues go up, so do variable costs. It's because you need more goods and services to match sales. But fixed costs go nowhere. They stay put. That’s why they’re called fixed.

To increase net profits, focus on fixed costs first. Use every chance to cut them. Lowering 10% could mean you need fewer sales to keep the profit. 

Explore raising prices. Customers expect a slight increase. It’s treated as cost of business.

Revenue and profit budget helps forecast cash. Use forecast revenue.

Control variable costs. Increase employee efficiencies. Use better key performance indicators (kpi). 

Use dollar sales for existing customers. Or measure customer referrals or repeat customers. It can vary by business.

Align employees using a strategic plan. It helps move the business forward together.

Keep it measurable. Work backwards from the your big goals. Match it to make short-term goals, which could (really) work.

Compare revenues from running the small business to forecast. Use forecast from revenue and profit budget. Adjust according to results. 

You’ll now have good control of your small business cash position. 

And double your profits in short order.

Written by Suresh Iyengar, P.E., President, Business Unit Execution LLC––“Explosive Business Coaching Houston Results For Small Business”. Want even faster results? Are you ready to learn? Call 281.410.5375 and speak to your Profitability Coach Houston today!

B) USE TACTICAL MARKETING

Decide on a maximum of 3 channels for marketing your business. If you take on more than 3, it may become difficult to check success rate. 

Measure, calculate and check return-on-investment (ROI) for marketing costs. Many small businesses treat marketing cost as “sunk” cost. You don’t have to. There’s a better way.

For example, direct post card mailing has bar codes. And there are services, where you could use different toll-free phone numbers to reach the same small business. So you can track which ad produced phone calls. And then repeat more mailing for the post card that worked.

C) USE RIGHT PEOPLE

Use the right people to do each role. It may take time to figure it out. But it’s worth it.

Next, hold the person accountable. Reward them if they produce results. Reinforce attitude and behavior that works for your small business.

Taking these 3 steps produced results for a small business owner, who did it in a shrinking economy. You could do it too!

Written by Suresh Iyengar, P.E., President, Business Unit Execution LLC––“Explosive Business Coaching Houston Results For Small Business”. Want even faster results? Are you ready to learn? Call 281.410.5375 and speak to your Profitability Coach Houston today!