Unless you are running a nonprofit, you are in business to make money. There is no shame in that. However, just because sales are coming in does not mean a business is profitable. You can have millions of dollars in sales and not profit from them. You can have sales of much less and profit greatly. We all operate at different levels, so the goal is not necessarily to increase revenues dramatically, but to increase the profitability of sales.
[Related: 1 easy and overlooked way to increase sales]
Building a more profitable business is a pretty simple concept: Increase sales while decreasing expenses. Despite the simplicity of the equation, it is not always so easy to do. There is a lot more tied to both sides of the equation. It all involves change.
The first thing that has to change is mindset. A person has to be willing to try new things. Are you open-minded enough to welcome fresh ideas? Do you let old ways and ideas hold you back? Change has to be embraced, and it starts from the top down.
Second, there has to be a plan. Where are you now, and where are you going? What do you wish to accomplish? Do you have people on board who will help you accomplish that plan?
Your plan needs action steps with measurable outcomes. You will need metrics that determine where your business is currently and that will measure your progress toward your goals. Include key team members in the process of setting these metrics.
List specific steps that will take your business where you want to go, including a timeframe for your objective. Once this has been determined, set milestones to help ensure you are on track to reach your goals. This measurement will also help create excitement among your team. Remember, little adjustments can create a huge impact. Again, team involvement will increase their commitment to your goals.
Finally, you need to implement your plan. This means that you are now operating according to the new processes you and your team put in place. It is a good practice to meet with the team to review where your business is compared to your milestone goals.
After your first quarter operating with these new processes, you may find that one of your initial goals is not attainable. With input from your team, you should revise your plan and then operate accordingly.
Celebrate the wins along the way. Create a visual of the milestones being hit; this increases excitement and morale. When you achieve your goals, there is always room for improvement, so sit down with your team to determine the next set of goals you wish to achieve.
