RUNNING A PROFITABLE BUSINESS
In a competitive marketplace, a business owner must learn to achieve a satisfactory level of profitability. Running a profitable business involves determining which areas of a financial strategy are working and which ones need improvement. Understanding the key factors in determining a profitable business assists business owners in developing an effective and profitable strategy for their business.
What makes a business more profitable?
Income must exceed expenses. Expenses are the cost of resources used for the activities of a business. Profits of the company are what is left over after expenses are subtracted from total revenue.
Things You Can Do In Other To Make Your Business More Profitable
· Sort out your proposition or offer.
What makes you different from others? Why should people buy from you rather than your competitors? Be able to articulate the ‘why’ and ‘what’ of your business in a way that is truly effective.
Decrease direct costs by 3% or more.
Go to all your suppliers and ask them for a better price.
Sack underperforming suppliers, customers and staff.
This will create a better working environment for your team and remove any customers who are making you lose money.
Get feedback from Customers
Focus on the benefits that they gain from using your product or service. This will help your business focus on areas which need improvement.
· Get more leads, say, 10%.
Get better at talking to people, asking for the business and closing the sale.
Going on a decent sales course (and sending your team on one as well) will add 10% to each of the fundamental steps in the sales funnel. Improving in each area
will create more customers.
Collect money quicker.
This will mean your bank balance will look healthier.
Write cheques slower, 10 days slower.
This will again mean your bank balance will look even healthier!
Decide on three things you can do right now to get existing customers talking about you.
These changes will make a big difference in your balance sheet. Take, for instance, implementing these changes in a random business that has a turnover of N100,000 and makes N30,000 profit per annum, If this same business is run with this model, using pessimistic estimates it will result in a turnover of N117,000 and the profits of N43,000! That’s a 40% increase in profits - the reality could be much more!