We’re all in business to make a profit, aren’t we?
Then why do we consider talking about sales or making a profit to be taboo subjects?
In social media, we only hear the cries of only do what you love, manifest it and you’ll be successful, know your why etc. Simon Sinek has a lot to answer for.
When did sales and profit become dirty words?
Sales and how you can make a profit are only talked about in hushed voices. Is that because they don’t exist? Or the promise of six-figure months is nothing but hot air? I’m not sure. Profit (and increasing your profit) is one of the most important things to work out if you want to have a successful business.
My why won’t feed me
The reason for starting a business is deeply personal. It’s connected to who you are and people who are important in your life. It’s what motivates you to keep going, inspires your purpose and influences the decisions you make. It’s a powerful thing to understand your why. But just knowing my why won’t feed me or pay my mortgage.
We’re all in business to make a profit (and increase profit) aren’t we?
So, how do we make a profit?
When teaching marketing strategy I often discuss there really only being four levers you can tweak to increase profit for your business. And, it’s highly likely that these levers are the same levers you’ll support in your marketing plans and activities.
1. Get more customers
Attract leads and nurture them so they become customers = Sales
2. Get those customers to spend more
Look at ways to increase the average spend per customer = ++ Sales
3. Entice those customers to keep coming back = $$ Sales = $$ More profit
Create a great experience that customers will naturally want to come back and stay in touch with them and make them feel special.
4. Increase your margins = More profit
You can do this in two ways, either reducing how much it costs to make or provide your product/service or by increasing your prices.
Pretty simple huh? So why is it so hard?
Focusing on your numbers will help you make a profit
I’m not a fan of business woo-woo, but I do believe that when you direct your energy into something you’re increasing the odds of making it come true.
That’s likely to happen because if you have a business mindset that you’ll make a profit your subconscious will find ways to prove you’re right (and you’ll monitor your costs). Or the simple act of deciding to make your numbers a focus means you pay more attention to them and you can take action if they start to move either way.
Getting a handle on the numbers that will influence how much profit you can make. And wouldn’t it be nice if that profit was higher than lower??
Here are a few marketing related questions to get you thinking about profit in your business.
- How many leads do you need to get one customer?
eg. On a website you may need 10 visitors (leads) to get 1 customer (conversion).
- How many customers do you need to buy/purchase your products?
- How much is your ideal spend per customer?
- How much of the actual sale is profit? (After you’ve taken out expenses for staff, cost of goods and promotion?)
- How many customers are repeat customers? Why?
- Once you know the answers what numbers impact your profitability you can brainstorm ideas on how to influence the results in your favour.
Make it a priority to make a profit this financial year
If you are a business owner reading this thinking……um….. I never think about this stuff or geez this is my wake-up call to pay attention to the numbers, then this blog is for you. It’s time for you to decide make a fat juicy profit this year.
Set up a business finances date night
This idea is adapted and borrowed from the barefoot investor but instead of your couple finances, it’s a date to talk about your business finances.
Here’s what it could look like.
- Weekly non-negotiable date in the calendar to look at your business finances.
- Standing agenda:
What’s coming in?
What’s going out?
What’s left over?
What are the projections for the next month? quarter? year?
What can you do to influence those numbers?
- Profit analysis
You need to understand your fixed costs, variable costs, and the actual cost to produce your goods and services.
This will guide how you price your product/services geared towards making a profit.
I’d wish you luck, but I don’t think you’re going to need it.