1st Step to Increase Business Profit

 

Profit is no more important to your business, as food is to your body. It is the fundamental measure, and life blood of a healthy growing business.

Your first steps to increasing business profit are not sexy or exciting, and because of that mindset, most business people never have great profits. What I am talking about is creating the right habits that will make getting great profits much easier for you in the long term.

Creating new habits is not easy, it’s uncomfortable, and that is why most business people live mediocre lives. They are too invested in being comfortable now, which puts them at the risk of living smaller, less uncomfortable lives, later.

Creating new habits is a lot like having to climb a huge, big ass mountain. At first, it’s hard as hell, but after a while it does get easier, and then moves into being quite simple.

When you create the right business habits, you will be significantly more successful than 99% of your competitors. If you’d like to have more information on ‘how to create great habits,’ go to my … blog.

The first step in being able to have great profits is to learn what and how to measure, the key activities & results. Measurement can seem cold and clinical at first, and one of the reasons is, because it doesn’t provide for forgiveness for your lack of results. As a society we are really good about judging ‘others’ on their actions, and judging ‘ourselves’ on our intentions. You can eat results, but not intentions.

Measurement has no regard for problems you encounter, or any excuses. It is focused only on whether the right activities have been completed, and that you are getting the right results from those. I am not going to lead you on, by saying that this will be “easy-peezy.” This will be challenging at first, and yet, it is not impossible either.

One thing that can bolster you up as you go thru this, is to know that it does get easier the more you do it, and after a while it can even be fun. With measurement you always have two choices; you can either make it your enemy, or your friend.

Without measurement there is no way for you to objectively know, if you are ‘really’ making progress in your business. Measurement keeps you away from being subjective and not fooling yourself about how you are really doing.  These rules & tools can be great indicators of where many of your next set of problems are likely come from, and what adjustments you should make now to minimize or avoid those in the future?

Review these weekly or never less frequently than monthly:

1. Lead with revenue, not expenses (Know before you invest any cash in any expenses, what and how much should you expect those to return).
2. Keep debt low, and best to get it to zero.
3. Keep overhead and fixed expenses lower than your industry averages. You can research find your industry averages on-line.
4. Follow your Chart of Accounts codes consistently. If you don’t know what I am talking about buy an hour of your accountants time to dial you into these.
5. Run a fixed expense budget with very few variances.
6. Carefully review your Balance Sheet and Income Statement monthly with a comparative analysis of what you have done before and how much are you improving or …
7. Be a class operation, but with no frills or extravagances. You must be able to trace back any expense back to a return on your investment?
8. Multi-use your space as much as possible
9. Set up both a Deposit Account and a separate Operating Account. Put all your income into the Deposit Account. Transfer only budgeted amounts into the Operating Account.
10. Review the books monthly (the checking accounts, financial statements, and the general ledger, plus any other key reports).
11. Share the profits with your team, so they can help guarantee that you will have them.
12. Treat staff as if they were partners, hopefully you have hired their brains as well as their hands.
13. Never lose sight that what you focus on improves, so know your key numbers (Financial Statements and other critical factors).
14. Be accountable to the numbers, what actually happened. Intentions are nice, but it’s the right numbers will feed you and your family.
15. What correlates with profits matters. Always be looking for these.

Each item above is a profit improvement rule or tool that will help you to better understand and then direct your business efforts to where you will have a life of many more options. If you you’d like to know more about how to use each to increase your profits, give us call.