You’ve got to make some money. That’s what makes it a business, not a hobby, right?
That’s why I’m so obsessed with PROFIT.
Okay, ‘obsessed’ is kind of an odd word… because even for me it can conjure up an image of a small, mean-spirited little creature rubbing its hands together maniacally…
… but trust me, my being profit-obsessed has nothing to do with greed, gold or power.
It’s about YOU being compensated fairly for ALL YOUR HARD WORK. My ‘obsession’ is actually more in the spirit of empowerment. I’m more like, “You are capable of more than you know” and “You had the power all along, my dear.”
When I urge business owners to FIND and KEEP MORE PROFIT, it’s because I know how hard we work to run our businesses, how many hours we put in, how much mental load we carry, and how much we care about our own clients, employees and high standards.
So let’s talk about profit, shall we?
Sky-high revenues don’t automatically mean a healthy business. There has to be money left at the end of product/service delivery, not to mention all your fixed expenses, for your business to be sustainable, healthy, and, frankly – for most of us, rewarding. The truth is, businesses exist to create money. That may sound blasphemous, but it’s the truth. Businesses that don’t create money long term, don’t exist long term. Money creation is otherwise known as profit.
Good news — there’s lots of ways to boost profit in your business. I start with the numbers and move from there into digging into the 3 Ps: Product, Process and People.
Let’s deal with PRODUCT for now. I’ll come back to Process & People later.
A profitable Product (and when I say Product, I mean whatever you sell. It could be a Service.) — a profitable product is priced higher than what it costs you to deliver it. Simple math.
But guess what? That means you need to KNOW WHAT IT COSTS. Because the only way to know if you’re making a profit is by tracking what it actually costs you to make, market & deliver that product.
And that’s where most small businesses go sideways. Often by simply not knowing what their true costs are.
Pat is a real estate lawyer who sells title work for $350 – it feels like a pretty good amount. But she often goes over time to get the job done. How often? Pat has no idea. She keeps hard copies of documents for her clients. And sends them the originals by mail. And puts all the costs on one credit card – luckily there’s always money in the bank to cover the costs.
Mike launches a passive income product – a social media course – for $497. He gets 3 people, then 8 people, then 10 people to sign up. Great. But he hasn’t done the math to figure out at what point he’s making a profit. It took 15 hours to create it, 40 hours to launch it, cost $200 in Facebook ads, and takes 3 hours each week to monitor the Facebook group. Of course Mike doesn’t know this because he doesn’t track his time. Now he wants to launch another course, but he feels like the first one was an enormous job, and doesn’t have any way to measure if it’s profitable!
Pat and Mike could RAISE their prices. But should they? How would that affect sales?
Pat and Mike could LOWER their costs – Mike could spend less on Facebook ads and get faster at launching. Pat could invest in something like document signing or drafting software that would save her time and fees. But should they? How integral to the service is each activity? What can be cut, and what can’t?
Until you’ve got a really good sense of the costs vs revenue for EACH of your products, services, packages, offers, promises…. PROFIT will stay in the ‘it feels like it’s profitable’ category.
And that’s not business, ~Contact.FirstName~, that’s the stuff of fairy tales….
If you want a deeper dive into ENSURING your business is profitable, sustainable and rewarding, join me next week for my new (and of course FREE for you) webinar:
Where the Heck is All My Money: Straightforward Cash Flow Management for Small Businesses
And then, dive even deeper and take advantage of special pricing available for Profit Matters Bootcamp — two days in beautiful San Diego entirely focused on YOU KEEPING MORE OF WHAT YOU MAKE. Details are at www.yourprofitmatters.com.
You WILL walk away from both of these training opportunities knowing, and making, way more!
Free Webinar – Thursday, 13th @ 3 pm ET
In this FREE training, I’ll show you my 3-Step-Solution to tame the cash ups and downs of running a business, so you’ve always got the cash, clarity and confidence to make smart decisions and savor your success.
Register your spot today and then join me on Thursday, February 13th @ 3 pm and discover discover:
- How to survive the seasonal swings and unpredictability that plague EVERY business owner
- A proven 3 STEP PROCESS to achieve CASHFLOW CLARITY
- What you need to do NOW to get a well-earned vacation
- 5 Freedom-Finding Benefits of knowing how to follow the money
- How one client went from sweating about every payroll to confidence and comfort about his cash