11 tips for Business Owners to help increase profits!
- Goals – have a goal and a plan in place as to how you are trying to achieve this Goal. Make sure it is a stretch, that people would think you are crazy if you said it out load but that most importantly YOU believe you can achieve it. Put in place Step Goals – however crazy the big goal is, work backwards and establish step goals – 1 year, 3 months, 1 month and 1 week. Rome wasn’t built in a day!
- Market – what is the market for your product or service. In a consumer goods business this would include identifying who your target customer is. All marketing and sales activity should be designed with this customer in mind. Put in place a clear marketing strategy, implement it and be consistent.
- Margins – How much does my business make for every unit of product sold or every hour of service given. Seems simple and in many ways it is but it is the cornerstone of having a scalable and profitable business model. In case you are unsure Gross margin is Selling price minus the cost of producing that unit sold. Gross profit divided by selling price is margin %. (NB – don’t forget to exclude VAT!)
- Cashflow requirement – what is the time from paying for raw material and labour to receipt of cash for a sale of a unit. This is the working capital cycle. Being able to fund this cycle is essential but it is not possible to put a funding plan in place until you know what the cycle is
- Sales Channels – What channels will the product be sold in – distributor, direct, online.
- Distribution – depending on the sales channels open for the product, distribution will be key. Having the best product in the world will matter little if people cannot buy it.
- Team – you have to surround yourself with an A + team. Put in place a recruitment process which will ensure you have such a team.
- Systems, processes and training. All aspects of your business will have a process. Document these processes. These will be amended and improved as you figure out what works well and what doesn’t work so well but without these in place the chances of scaling and succeeding are reduced. A clear process will eliminate communication issues, it will take that vital information out of your head so that others can use it and will allow your team to grow around you.
- Funding – have you appropriate funding in place to achieve your goals and objectives.
- Financial reporting, management accounts and KPI’s. Ensure you have measures in place. In previous blogs we have written about the importance of knowing your numbers. As a business owner you have to know your numbers.
- Exit Strategy – when this term is used people generally think it’s not relevant to them. That this is only for multi-million pound businesses. That is not the case. Your Exit strategy is what will impact you and your family’s lives.It is why you are in business. If you have no intention of selling you still need an exit strategy to allow you to retire.
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