Improve your Profits

Are you thinking that you need to improve your profit? Let’s just start with a few questions to first make sure that this is where you’re supposed to be. Here are five kick-off questions: 

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If you’re asking these types of questions, then you know what we mean. That leads to two further questions:

1. How do you find a way to improve your profits? 
2. Or even worse, how do you make a cash profit even if cash flow says no?  

If this is you, then read on. 

If not, then click here to take a look at our other tax and accounting solutions for small business owners. 

What exactly is profit? 

Technically, it is the surplus generated when your revenue exceeds your expenses. 

But it is more than that … 

Profit is the ultimate reward that comes from the strategic and efficient management of your business. 

Beyond being a mere financial metric though, profit represents the essence of success and accomplishment. 

It signifies that your business is not only sustaining itself, it is thriving. 

Profit empowers you to reinvest in your enterprise, expand your operations, and take calculated risks to unlock new opportunities. It is the key that unlocks the door to sustainable growth, enabling you to fulfill your aspirations, secure your financial future, and make a lasting impact in your industry

That’s what I want … but I’m not there yet!

We do hear this a lot. Wanting to increase your profit is natural for anyone who has their own business. This is a good thing too. It shows that you have ambitious goals for your venture. 

While you may not be where you want to be at this moment, the good news is that there are steps you can take to push closer to your profit goals. And you’ve taken the first one by at least searching out for information on how to get you there. 

Success in business very rarely happens overnight. Success in an outcome of many little steps taken over and over again. If success is your destination, how are you going to get there? 

Is there a formula to boosting profits? 

Yes. The formula to grow your income is as ‘simple’ as:

If only making more profit was this easy… 

Making more sales won’t necessarily create profit where those sales are products that have no or low margin or have high costs to deliver. Same as cutting costs across the board won’t necessarily help either.

Did you notice that I had put ‘simple’ in quote marks?  

Just because you know the macro though, doesn’t mean you know what to do with it or the specifics of the tactics? So what are the specifics? What if I told you that increasing profit was a function of 7 things done well? 

You’d be asking, “What are the 7 Things?”

Now here is the REAL formula for profit. The true drivers for change.

Here are the 7 ways that you can boost your profits: 

1. Lead Generation
2. Conversion Rate
3. Retention Rate
4. How Much They Spend
5. How Often They Spend
6. Your Profit Margin
7. Your Expenses

Did you notice that each of these things are things that you have an element of control over. That means that you can make a plan to manage each and every one of these things. 

Why am I telling you what they are? It’s because simply knowing what they are doesn’t mean that you will take action on them. In which case this is information, not knowledge. 

Taking action is power

If you take action on these 7 things then you will:

• Acquire new customers
• Grow your Revenue
• Rocket your Profits
• Increase your Business Value 

And best of all … you’ll gain the peace of mind that comes with running a more certain business in these volatile times. 

Want to see the impact of this using real numbers, watch this quick video. 

When you know the numbers driving your business then small changes bring massive results!

But you must at least have a roadmap for where you’re going. The question then becomes “Which way do you want to go?”

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“If the ladder is not leaning against the right wall, every step we take just gets us to the wrong place faster.” 

— Stephen Covey

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Is failing to plan killing your future? 

You may not like this, but generally a lack of business profit is the result of your failure to plan!  

Yeah, sure. There are external things. Rent goes up, wages go up, planning changes happen. These are all foreseeable though. They are normal business risks which should be something already considered. The great news about that is it means that these sort of potential events can form part of an overall plan in your business. 

What you can’t do anything about or control are events like major government interventions. We all saw (or lived through) the forced business closures during COVID. There could be accidents that cause your business to close up shop, temporarily or permanently. Yet even these unlikely events should have a contingency plan. 

Effective planning is about thinking through the events, from most likely through to improbable and then weighting the impact of the consequence. 

That helps you determine where to put your focus. This might seem like a bit of a sideway turn from  talking about profits – but it is ALL related. 

For you to even have a hope of guiding your future then you need to have a plan. Otherwise you are an accidental business owner. At that point you are just reactive and waiting for things to happen.

To be honest, it isn’t the plan itself, but the process of planning that is the key here. Life will always  throw a curve ball, they key is to be flexible. 

You have to start somewhere. Start with version 1 of Plan A. 

Profit and its link to Equity

When you work through these variables in your business then you are not only increasing the cash coming into your business, you are also increasing the EQUITY in your business. Your goal should be to create a business that generates income for you every single day.

An even bigger goal could be to have your business generate that income for you every single day … when you aren’t even there. 

You likely commit to as much as 80% of your waking hours either at or to your business. And, this time, energy and money going into your business can be one of the best investments you will ever make – because when you do this properly you are creating not just income but real wealth.

This is important because income tends to be spent, whereas equity accumulates and ultimately converts to wealth. So do be thinking about equity in general and about growing the equity in your business.

You deserve to get the maximum current and future value or payout from your business. And just as importantly your business should be serving you throughout this whole process. 

How can we help? 

First of all, we seek to truly understand you and your business. What is it that drives you? How does your business fit into your lifestyle plans, both now and for the future? 

You need a well crafted roadmap that will take your business to the next level. Without a plan you are navigating blind folded and will either fall prey to shiny objects or missed opportunities. 

What got you to where you are, won’t get you to where you want to get to. 

So when it comes to improving your profit, you must plan strategically. This is the foundation to achieving sustainable and long term growth. 

Our Strategy + Tax programs have been specifically designed for both implementation and education. You need to know what action you need to take in order to being making positive changes for your business. 

But you also need to know how to take these lessons and build on them for your own personal and future growth.  

If you aren’t ready for all of this, at least getting your compliance in order is the first step in getting on the path to future growth. Find out more about our Just the Tax programs here. 

How do we do this? 

You can only improve your profits when you really target the 7 things above. Doing that will lead to an optimisation of your profit margins. 

Yet just because you know the levers to target, doesn’t mean you know how to use them effectively in your business. Yeah sure you could do your own research and then have a go at trying on different strategies but how much time and money will that cost? 

That is where we come in. We have both seen, and used ourselves, numerous strategies and tactics to make positive business change. It is through our experience and guidance that you can take a shortcut to optimising your profit. 

You have to be willing to gain insights into the strength and weaknesses of your existing business model. And you must be willing to make changes where you see that there can be improvements. 

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