By focusing on these key areas, you can achieve the success and profitability you deserve
Having given up a good-paying but tedious government job, Karen was enamoured by the business and the lifestyle, but soon reality set in. Though she thought she had thoroughly investigated the business before she bought in, Karen soon found out that things were not quite as they seemed. While the business had decent revenue numbers, the company was losing money.
Karen went right to work to turn things around. She toiled hard to make the business profitable by focusing on two areas, margin and labour costs. Over six months, Karen increased the margin from 35 to 37 per cent and reduced the labour costs from 22 per cent to 20 per cent. These changes, which took some dedication to achieve, turned the business around and moved it from a failing business to a profitable one.
Karen admits that she still has some work to do but has climbed out of a hole and is moving up toward the treetops.
You, too, can climb to new business heights by using the following seven techniques:
1) Create a plan to get focused and primed for success
Troy was drifting along with his plumbing business when we first started working together. Like many business owners, he was not committed to focusing on the key elements that would enable him to take his business to the next level. This commitment starts in the mind by believing in yourself, believing that you can be successful and that it is possible to have a decent income and a balanced lifestyle.
Once Troy recognized his potential and made a mental commitment to his goals and the steps necessary for his success, the rest became much easier. Troy started working smarter and doing more of the things he enjoyed doing and was good at.
The results were significant. He was able to enjoy a much larger income and work with clients who appreciated him instead of those who drove him crazy! Committing to owning a profitable business and not just being committed to being a business owner are two different things. Creating a plan and remaining true to it will take your business to new heights.
2) Build a new business strategy
John’s construction company was following the tired model of bidding for work in a competitive market. Times were tough, and the work was not coming in as it had in the past.
John had troubles because he was not one to spend time networking in order to dig up business. As he told me, he was unsatisfied with building dreams for others and wanted to start building his own. Those dreams did not include constantly looking for work and bidding unsuccessfully on jobs.
John adopted a new strategy of thinking outside the box. He began to presell and build projects where he could control the outcome. This change in focus elevated his business to new levels and allowed John the time he wanted to spend on projects outside his company without worrying about always looking for new contracts to keep his employees busy.
3) Leverage what you already do
In his article Nine Drivers of Upside Leverage, (2002), marketing legend Jay Abraham talks about how, as business owners, we can take our business to the next level by making small changes to what we are already doing well.
If you are advertising and getting a two per cent response rate, concentrate on making changes that will get you a four or six per cent response. What about focusing on conversion rates? Whether you are working online or in a brick-and-mortar store, a one or two per cent increase in the number of people you can convert from browsers to buyers can make a huge difference to your bottom line.
What can you do that will engage these browsers and turn them into buyers? Think of all those things you already do and find ways to improve them.
4) Invest in your people
Chances are that you have some great employees, but when was the last time you spent money on taking them to the next level? How much would a training course in sales cost you to put on for your staff? How long would it take you to recoup those several hundred dollars if your employees could sell five to 10 per cent or even 20 per cent more over a day, a week or even a month?
Consider training key team members in customer service, digital marketing, technical skills training or even bookkeeping. Investing in our people often takes our business to the next level.
5) Bump your margin
In my book Profit Yourself Healthy, I took an in-depth look at how you can improve your profits by increasing your margins. Many business owners don’t charge enough for their products and services and often don’t make enough margin to keep their business profitable.
Like Karen, making small changes to your margins by maximizing your savings from your suppliers or taking advantage of buying opportunities can make a huge difference. Most customers don’t notice a price change of less than 12 or 15 per cent. By changing our parameters around our pricing structure we can often take our business to a new place of profitability and success.
What is holding you back from thinking differently about your pricing model?
6) Communication is key
Believe it or not, improving communication can take your business to the next level. The biggest complaint of employees is that there is poor communication between the management and the staff. Look at it this way: as owners, we have a vision of where we want to take the company, yet how often do we talk about that vision with our staff?
Of course, we want to make more profits or increase our margins, but we need to communicate how this will happen by discussing with our employees what they need to focus on and why. If our employees hear us talk about profit all the time but not about people, then we lose credibility.
In clearly communicating our objectives and expectations to our employees, we provide the building block to enable us to grow.
7) Implement systems
Whether you want to do it now or in the future, at some point you will want to step back from your business. In Profit Yourself Healthy, I talk about the need to systemize your business so that every time your customers interact with you, they get a consistent and reliable experience, and you, as the owner, can count on your business to deliver that.
Three things happen when we systematize:
- You get a business that can operate and make money when you are not even around
- You get a business that is more valuable for prospective buyers
- And perhaps more importantly, your staff know what to do and what you expect of them, leading to less micromanaging.
Building and growing a business is hard work, and knowing where and how to make your business profitable can be just as challenging. We know that 60 per cent of businesses have difficulty in this area. By focusing on key areas and taking initiatives different from those you have taken in the past, you can achieve the success and profitability needed to provide you with more freedom and less stress and take your business to new heights.
Dave Fuller, MBA, is an award-winning business coach and a partner with Pivotleader Inc.
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