Maintaining a profitable business is no easy task. At least that’s what many business owners think. Often it is assumed that profitability is some pie in the sky that is hard to reach unless you have a big business.
Well I am here to tell you that that’s false evidence appearing real. Yep FEAR!
Fear is that thing that stops us dead in our tracks from doing what needs to be done to grow and build a profitable business. In order to be profitable you have to put your big panties and drawls on and play the game the same way the big boys do, IF you want to have a sustainable business. Just scale the game to your size.
Here are 3 other reasons why your business is not profitable.
This by all means is my favorite way to generate profit. How does this generate profit you ask? Well simply put, it gives you a point of reference as something to work towards to achieve. It’s setting the flag in the ground for the finish line. See once you set this flag on the ground as to where you are trying to go, it forces you to look at how you are going to get there. Charting this path puts you smack in front of the costs that it will take to get you there which then helps you determine the amount of money you need to make to not only cover those costs but also to exceed those costs. It’s almost impossible to sit down and lists your costs and then only list the income to break even. You can’t do it. We are not wired that way. You will always want to exceed your costs. And exceeding costs equals profit. (cue cha-ching sound)
Not Managing the Number
Once you have established this budget you need to make sure that you manage the numbers in it on a monthly, no less than quarterly basis. How are you performing compared to what you planned? Where are you exceeding costs or not meeting revenue goals? Managing the numbers allows you to take course corrections as needed to ensure that your budget or goal is met. I always say you have to know your numbers if you want to grow your numbers. And don’t just look at the numbers, analyze them in various different ways. Conduct ratio analyses to find out how liquid your assets are or how many days it takes to collect your receivables or how productive your staff really is by comparing the hours worked to the value of the finished product.
Let’s face it, we all have 101 things to do daily. And it all seems urgent. But without prioritization, none of it will get done. Or worse the things that don’t really matter will get done first and the things that are urgent will fall to the waist side. Every day you should have a list of things that need to get done that day. And the first five things on the list should be the most urgent. Everything else can wait – even if you don’t get to it that day. The world will not end because you don’t write that blog or send that newsletter. Yes creating and sharing content is important, but if you have invoices that have not been sent out yet, THAT is more important. Because sending out invoices means you are doing activities that will increase your cash flow in the very near future.
What strategies do you uses to generate profit in your business?