Want To Double Your Profits This Year?
If you wanted to double your profits this year, do you know what that number would be? Do you know how to get there? After doing your taxes for 2009, did you review the numbers to think about how to improve your business and personal finances for this year? If you want to double your profits this year, what do you have to do differently?
Your tax return is a snapshot of what happened last year. As a business owner, it’s your job is to stay close to the numbers. Staying close to the numbers in your business means studying your financial reports monthly if not weekly. By staying close to the numbers, you can make strategic decisions quickly and effectively because you are focused only on what it will take to double your profits (not being distracted by any other number along the way).
First decide why you want to double profits? Your ‘why’ has to be big enough to commit you to do everything in your power to achieve the goal – a ‘whatever it takes’ attitude.
Is doubling your profits this year a need or a nice goal? Are your total revenue strategy and cost controls in place to allow you to double your profits?
Once you do decide to double your profits this year, use that objective as your criteria in every decision you make all year, in every goal. When you know your criteria, it makes every sales decision, every marketing decision, and even every expense decision that much easier to make.
“Profit in business comes from repeat customers,
customers that boast about your project or service,
and that bring friends with them.”
~~W. Edwards Deming
If you know you want to double your profits this year, here are a few steps to get you started:
- Revisit your cost structure – can you reduce costs by outsourcing or automating or changing vendors? Ex. Is it cheaper to use a local bookkeeper or outsource to a service that does the work in India?
- Review all costs/sale to determine where you can save time or money. Analyze each one line by line. These savings will drop to the bottom line. Ex: Can you submit proposals by email instead of printing and mailing them by FedEx?
- Revise your pricing model – Ex. If you currently bundle your services, can you increase your profits by unbundling without losing the sale? If you currently provide a menu of products/services, can you increase each sale and reduce costs by bundling them?
- Expand your client strategies or open new market channels to increase the top line (revenues) at the same time. Ex. Can you add a joint venture arrangement that increases profits more than costs?
- Introduce a new product/service that requires a very low cost for you to launch but can command a premium price in your niche returning a very high profit to the bottom line. If Fortune 500 companies can cover costs on 10% of price and produce a 90% profit margin, you certainly can command a 25% or 50% margin.
If your goal is to double your profits in 2010, that has to be your driving focus in every decision and every action you take. To achieve your goal, weekly profits/sale or profits as a % of revenues and year to date profits become the key performance indicators you track. You can’t be distracted by vacation time or new product development or competition. It takes discipline and commitment.
