3 Steps to Build Business Profits

We are seeing many very good businesses that are having a difficult year or two. Most of the problems are the result of reduced revenues due to the downturn. Three steps to get your business back on track and rebuild profits and business value are:

1. Monitor business results daily. You should have a system so that you know where your business stands at the end of every day. It is better to be approximately right rather than 100% accurate 60 days later. For larger businesses this may be a sophisticated dash board computer program. For smaller businesses it may be a notebook with vital statistics. Most industries have vital statistics that experienced owners watch. For instance in the auto repair business shop owners watch number of tickets and average ticket size. Since they know their typical gross margin on each ticket and they know their fixed overhead costs they immediately know if they are gaining or losing.

2. Stress Test your business. Develop business projections based on what is really happening today. Then reduce revenues another 20 to 50% depending on your industry. What will you cut - how will you at least break even. Finally set firm bench marks as to when you will make those cuts. It is too easy to keep hoping tomorrow will be better.

3. Sell, sell, sell. Sell new products and services to your existing customers. Look for new customers for your existing services. As a sales & marketing expert told me: “If I was advising buggy whip manufactures on how to increase sales, I would suggest porn shops.” Be creative, take a stab and track results.

Obviously there are endless ways to get your business back on track. Each business experiences its own opportunities and challenges. These three steps are a starting point. You are welcome to contact us to discuss these ideas or any others you may have in order to build your business profits and value.