This is a guide to increase your income (profits) that you get out of your business. As a business owner the more profit the business makes there is more potential for you to increase your personal income.
The Available Growth in profit in your business comes from the income that is available to you NOW, from money that is already circulating in your Business. It just requires optimisation.
The following are the eight key drivers where there is significant growth available in every Business:
- Pricing – most businesses are under-priced, however are not sure how to increase them without losing customers. The most common mistake is not covering all the costs associated with the delivery of goods and/or services. Prices need to be set high enough to cover costs and make a profit.
- Cost Reduction – actively managing your cost of goods and overheads requires discipline, creativity and a willingness to work hard with your suppliers to maximise performance.
- Productivity – involves optimising the productivity levels of your staff. Most businesses have more productive capacity than they need, therefore with setting output targets/KPIs staff will be motivated to achieve more and get closer to maximising their productivity to the business.
- Staffing Levels – this involves determining whether the business has too many or too little staff for your businesses current demand. Many businesses go through highs and lows of demand and during the highs usually employ more staff which are costing them during the lows. There are many strategies to optimise matching staffing levels to demand.
- Debtors – this is a delicate area for most businesses and needs to be actively managed, especially your trading terms. Essentially businesses need to stick to their trading terms; have a debtor recovery procedure that they can call on; intimately know their Aged Debtor report; and most important of all is to maintain open lines of communication.
- Stock Control – if your business has stock it needs to be turned over as fast as possible because if there is too much cash tied up in stock, finished goods or work in progress it will stifle your cashflow.
- Sales and Marketing – every business needs to actively manage and encourage customers to buy from US not THEM. This will start with establishing your point of difference that resonates with your customers and your value proposition. This can be communicated in a variety of sales collateral and marketing activities.
- Business Growth – every business can be scaled up and this scale will be determined by what you ultimately want out of your business. A growth plan is the best place to start as it will identify the goal, the strategy to achieve the goal and the tasks required for implementation in the short and longer term. It forms the basis of your long term strategy to beat your competitors.
Within each of the eight key drivers there are many strategies you can implement to improve the performance of your business and achieve success.
What key driver is the most significant in your business that you would like to optimise for your business success?
Timothy Lakeman 