What you focus on, grows.
I focus on PROFIT. I’ve claimed the title ‘Profit Optimizer’, my latest event was titled “Profit Matters Bootcamp’, I’m constantly watching the profit margins in my clients’ businesses and you could accuse me… and I wouldn’t hold it against you… of being a little Profit-Obsessed.
I mean, if something’s gonna grow… best that it be your profit.
But Anne (I hear you asking) I’ve set all these REVENUE GOALS for my business. I’ve set monthly revenue targets, reverse engineered my pricing, I’ve been tracking sales, I’ve EVEN been cash-forecasting my revenue like you told me to here!
Revenue, revenue, revenue. That’s what experts all over the internet are talking about, right?
Here’s where I land on that. Yup, by all means, brainstorm ways to grow revenue. It’s a number you can use to measure progress, describe your business, and get seated at fancy restaurants. “Don’t you know? I’m the founder and CEO of a 6-, 7-, 8-figure business!”
BUT FIRST… I want you to focus on your PROFIT. And here’s why.
If you own a business with annual revenue/sales of $200,000, and you can consistently claim an average net profit of 10% on all those sales, you should be able to show, for that year, $20,000 in profit.
In simple terms we’re saying you sold 8 coaching packages at $25,000 each, and all told — after salaries, tech costs, supplies and overhead — it cost you $180,000 to fulfill your commitment to those 8 wonderful clients.
Let’s say you decide you want to increase your revenue, You get really strategic and great at sales and the next year you’re able to increase revenue by 15% (you sold 9 full coaching packages and a VIP day for $5000). So now you can boast revenues/sales of $230,000. Yay you! You’re still making 10% profit on each sale, so this year you’ve made $23,000 profit, an increase of $3,000. Woohoo!
Okay. Now let’s say you look hard at your top and bottom lines and realize you can get a little more efficient at delivering on each sale. You switch a supplier and decrease your expenses. You improve a process and do more with your hours, which means payroll goes farther. You cancel a subscription which cuts down your overhead costs… even just by a little.
Now you’re able to claim an average net profit of 15%, where before it was 10%. To deliver the same 8 coaching packages at $25,000 without compromising the service or the outcome, you’ve wrangled the costs down to $170,000. This year, you’ve made a profit of $30,000, an increase of $10K! Without adding any extra VIP-day work.
Every client I’ve ever worked with is happy to trade boasting about 15% revenue growth with $3K in their pocket, for another $200,000-year… with an extra $10K in their pocket!
Of course, if you can increase both revenue and profit in this manner, sliding your annual revenue up 15% and your profit up 5%… then those $230,000 sales would give you a profit of $34,500.
Yes. Let’s focus on THAT.
I know it’s not always possible to cut expenses significantly and, at the same time, expect and manage growth. My mission-driven, service-based business clients are extremely sensitive about delivering a high standard of service and the transformation/solution/outcome that they promised.
But what these numbers show is that taking steps to make sure your business is as efficient, cost effective and profitable as possible is worth its weight in gold…literally
… and if your focus can only be on one or the other for 2020, your efforts to maximize your profit will pay you back more generously…
…and that being obsessed with profit is actually an extremely desirable and attractive trait. One that you are welcome to share with, well…..anyone. Happy obsessing.
If you’re curious about how to make these shifts in your business to ensure it is as efficient, cost effective and profitable as possible, I’d love to help. We’ll start with the numbers – that’s my thing – and I’ll explain how to realize great profit each step of the way. Book a complimentary Keep More Money Strategy Call here.