How is your business performing? Have you met all your business goals for 2021? If not, why not? When was the last time you reviewed your income statement or cash flow?
Here are a few suggestions to consider…
- Review expenses. If your business realized total expenses of $500,000 and you can decrease expenses by 5%, the result would be a $25,000 boost to profitability. For this to happen you would likely need to address some significant expense items, such as (a) negotiate new lease terms with your landlord – if you rent; (b) negotiate new terms with vendors; and/or (c) review all labor costs to be sure there is value in every hour worked. Cost reductions can be accomplished, but it takes work.
- Review quantity sold. Increasing the number of units sold or increasing client hours billed takes initiative. You need to be deliberate on growing your leads and improving your pipeline. Increasing quantity sold by just 10% could have a tremendous impact on your bottom line. For example, if you sold 15,000 units for $20 and increase quantity sold to 16,500, your bottom line would increase $30,000.
- Review price. How are you priced in the market? Can you increase price? If so, by how much? Don’t price yourself out of the market, but unless you provide subpar services or product quality, you should be able to increase price consistent with the rate of inflation. For example, using prices from #2 above, increasing prices by just 5% could improve profitability by $15,000 (price goes from $20 to $21 with quantity sold of 15,000).
Now let’s consider implementing both #2 and #3 above. You increase sales by 10%, while increasing price 5%. Gross Revenues improve from $300,000 to $346,500! That’s an increase of 15.5%. That is real money! Just imagine if you worked with a business consultant and coach to help you reduce expenses as well! Your profitability would explode!
If improving your bottom-line is of interest to you, at Understandable Solutions Academy we can help you. Visit http://understandablesolutionsacademy.com/#coaching and schedule a no-cost introductory call. We look forward to putting more money in your pocket.