Imagine you are in the top 50 of your industry Australia wide out of a field of 1600, and you get introduced to the owner of the No 1 performing business in your industry. You arrange for private lunch, a chance to speak one on one with a keynote speaker at industry functions, someone that runs a team of 7 to your team of 1 (just you). He is the real big dog on the block. This is your chance to find out what they do that makes them No 1.
You're sitting at the table in anticipation, waiting for some pearls of wisdom to come forth to help you get bigger and better. And then he arrives. You ask and he talks.
After an hour you work out 2 critically important things. Firstly, he is on his way to a heart attack and an early grave by working ridiculous hours each week, and secondly (because you know the industries pricing structure) you know that...
... every month you are making 34% more Net Profit than him.
That's right 1 person outperforming 7, a difference of 938% profit per employee. A true story.
The 3 words that will change YOUR business... "Focus On Profit"
It's Whats Behind The Veil That Matters
It's easy to sit in awe of your competitors, and try to do the numbers of how much they are doing in sales. But big numbers are irrelevant. They are only part of the game and when you constantly focus on turnover you are leaving out the key parts of the equation. You can't survive or flourish unless your business is making a healthy profit.
Remember this one most important phrase:
"It's Not What You Make That Matters, It Is What You Keep".
What's You Can't See Can Hurt You (BIG TIME!)
The problem for most businesses is that they don't increase the visibility of profit in their business.
To have a proper profit focus in your business you should stop waiting till the end of the year to find out if you have made any money or not. You should be looking at your figures weekly or at most monthly. Get your bookkeeper or accountant to do this (if its too much trouble for them, get someone else)
If you are doing quotes, build your overheads into your quotations so you know on each quote how much money you are REALLY making.
Other Profit Focused Strategies
Measure your profitability per employee per month (as I did above). This gets you focused on getting the maximum bang for your buck out of your team.
Check your profitability per customer. It most probably wouldn't surprise you to know that those "problem" customers who expect the world and want to pay peanuts are costing you money. Focus on "A" grade customers.
Reward your salespeople based upon your most profitable lines not necessarily on highest sales figures.
And obviously keep a tight control on your expenses, don't spend on things that aren't going to make you a profit.
It may seem obvious, it may seem basic, but don't fall into the trap of NOT looking at the bottom line at least once a month.
Get Moving: Print your Profit and Loss report today and check it. Start asking questions (of your accountant, suppliers, team)...
Steve Smit is a Business Coach with Reality Consulting.
He works with business owners who want to increase their take home profits and work shorter hours. For a free copy of his "Business Accelerator Pack" visit http://www.realityconsulting.com.au/ or please email stevesmit@realityconsulting.com.au.
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