When a new year or quarter begins, you likely search for (ALL of the) ways to improve your business. While I believe this exercise of recalibration and reinvigorating your business should be an ongoing process, I want to lend you five ideas to increase your profits. And I believe you can implement these THIS month.
In Fix This Next, I explain how for every business, there is a Business Priority Pyramid:
Notice how each level is dependent on the foundation of the level below it, meaning if you don’t have, say, a solid foundation of sales in your business, your profits are going to suffer. However, I want you to be aware of something that you will learn about further when you read Fix This Next. Sales are not always the answer.
When your business begins to feel unsteady, what’s your first reaction? “Create more cash flow! Now!” Normal. We all do that, even with our personal finances. But by doing this, you’re not viewing your business holistically. What are you doing with that cash after there’s an influx? How are you managing your profit to sustain your business?
Let’s get into some strategies to manage your profit better. And look, you may feel apprehensive to implement these at first. But have I steered you wrong yet? Let’s do this.
Raising prices: Most businesses are terrified to do this because they think it will be complete death to sales. And, that’s just not true. I won’t get into it here, but it is very likely you can increase your prices at least a little bit, probably a lot.
Cutting expenses 10% overnight: Warning, very painful, but very doable. The first 5% is joyous, the last 5% will scare you. But after a few weeks you will adapt and you will wish you did it sooner.
Qualify your opportunities: We are so quick to say yes to work that is low $/hour margin for our businesses. Stop doing that, now, and don’t go back. Establish a minimum threshold of profit a project must achieve to be worthy of the precious resources your business must spend to deliver on it. If this means losing out on work, be happy, and use the time to solve the more difficult problem of finding high margin projects.
Engineer profitable alliances: So often competitive advantage focuses on having a better widget or happier customers. Those are essential elements, but we forget about building great relationships with other businesses and key influencers in our industry. This isn’t a mystery topic either. Yes, some people are natural at this but others need a framework. I’ve built one in Fix This Next if you want to see it.
The right people in and the wrong ones out: If one of your employees calling in sick actually makes you happy, you should have probably fired them a long time ago. One of the greatest profit sucking holes in a business is an employee who doesn’t fit the culture. Notice, I’m not talking about the expense of wages here, and that’s because it is peanuts to the negative ripple effect a bad employee fit has on the productivity of an organization. This is one of the most heart wrenching topics in all of business because nobody enjoys firing someone else, and if you do, you have problems: go get some therapy. Once it’s done, you and your company breathe again because you’ve been used to living with such tremendous weight on your chest.
Ok now for a confession: The above is an excerpt from the lost content of Fix This Next. If you would like to access more lost content, let me know by emailing support@mikemichalowicz.com.
Let’s make it an amazing year!
-Mike
For more business solutions to apply today, check out the free resources page I have created for you which includes systems from each of my books to scale and sustain your business.
