Keeping Your Bucket Full – A Process to Improve Profits

Like a bucket of water full of holes – your business has areas that can leak profits.   However if you do not have the sales coming in – then you may not be holding the bucket under the faucet or you missed the rainstorm. 

Generating a profit is a result of bringing together the right combination of pricing, direct costs, and overhead.    To begin with, it is important to sell right.  Finding the right customer and setting prices that work for you and the customer is critical.   Incurring costs is the easy part.  Incurring the right takes skill and timing. 

If you are not getting the results you desire – take an intense deep look at your business.  Start by…

  • Mapping out your marketing process, sales process, obtaining the product or service you are selling, the delivery process, and collection process.  Walk through a sale – starting from prospect to happy customer.
  • Gather your financial numbers, specifically sales to each customer, the direct costs of those sales and your monthly overhead.
  • Note what your customers say about you.  Gather testimonials, reviews and comments.  This will tell you what they value.

With information in hand, it is time to see what is missing and what can be improved. 

SELLING RIGHT.  You may be losing money on every sale.  The gross margin is the difference between the sale price and the direct costs to deliver the product or service.  If you are losing money on items you sell or service you perform, you are going in the wrong direction.  

  • Make sure you are charging enough.  If your price is more than the market can bear – then reduce your costs or stop selling it. 
  • Sell to the right customer – some pay more than others do.  Choose your customer rather than adapting to them.  Say no. 
  • Verify that your marketing is attracting your ideal customer.
  • Review the direct costs to find ways to reduce them.   Consider technology, outsourcing and your supplier costs.  
  • Deliver maximize customer value.  Is the time and money you spend on every step rewarded and valued by the customer you serve? 

OPTIMIZE OVERHEAD.  Overhead includes all the costs to run a business.  The key here is to have the gross margin greater than the overhead.

  • Optimize your current resources.  This includes people, space, workflow, technology, etc.  
  • Sell what you have not what you need to acquire.   Fully utilize what you have. 
  • Buy used instead of new. 
  • Pay cash.  Don’t spend future profits.  You can upgrade with the cash starts rolling in.
  • Inspire and train your people.   
  • Keep expenses flexible.  Start with a month-by-month lease.  Hire part time until you have the income to support a full time. 

Be sure you know your numbers.  Each company is unique.  There is always room for improvement.  Let’s keep that bucket full!

Stop doing the same things over and over and getting the same disappointing results!  We can help find your unique advantage to increase your sales and your satisfaction in your business.   Together create an action plan to stop doing the things that are draining cash and focus on your strengths.

Call us now to set up an strategic meeting and improve your bottom line!  920-351-4842.

By Mary Guldan-Lindstrom CPA

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