We all started our business for one reason or another. Maybe you love matching people with their dream home or guiding people through the toughest challenges in their life. Whatever gifts you were given you figured out how to turn them into a business AND make money.
But we don’t just want to make money, we want to make a profit. Profit is the one thing all successful businesses have in common. Without bringing in that little extra cash you limit your business in more ways than you expect!
Without profit you cannot reinvest back into your business. There is no extra cash to invest in a new website, computer, or hire that next employee to help you grow bigger and better!
Profit is needed for a business to be financially healthy.
So why do so many of our businesses lack profit?
Easy, it is not that we don’t make it a priority – it is that we don’t know how to make it a priority.
Often when we listen to coaches or mentors advise us on how to increase profit they tell us 1 of 2 things. We either need to increase our prices or decrease our expenses but that is just an oversimplified view and does not actually tell us anything!
Which brings us to this article – in this article I want to provide you with some not-so-obvious ways to increase your profits. These are intended to be specific so you can take real steps towards change!
1. Address Inefficiencies and Waste
Are you spending money on products or labor that is not resulting in revenue generating activities? Are you working on projects that end up falling through? It is these sorts of events that can cost you big!
For example, does your business experience a high employee turnover rate?
It may not seem like the biggest issue if you are able to fairly easily replace the employees but this can cost you time and money when you have to train every new pair of hands that lands in your business.
Have you started projects but struggle with following through?
Time is money. Be conscious of what revenue generating projects have been forgotten and either complete them or forfeit the sunk costs.
2. Become an Affiliate
No matter what type of business you are in, you likely have a few tools you consistently use. If you are a therapist you may have a meditation course or essential oil diffuser you recommend from Amazon. If you own a cleaning business, there are likely some products you know will help your clients keep their spaces clean between cleanings.
Whether it is a physical product, application, or service you outsource, there is likely some way you can generate affiliate income from referencing these items.
Physical products can be recommended from Amazon where you can pull in a nice chunk of change. Apps often have referral programs that provide you with a specific link and benefits. Service providers also may provide referral offers for sending them qualified leads!
This is a great way to build on the value you are already providing while also increasing your own profits.
3. Get Better At Managing Your Finances
Um, I thought we weren’t going to be talking in general terms? Specific actionable steps, remember?
Yes – but we are also talking not-so-obvious and frankly this one is often ignored but easily can be the most effective. Get better at managing your finances means putting in the time to understand where you are making the most money, where you are wasting money, and where your dollar is carrying you the farthest.
Ok – let’s look at an example.
Let’s say your business is doing well but a couple of your clients decide to leave for reasons you can’t control. That’s normal and no reason to panic but you decide to cut back on your spending.
Some may recommend combing through your expenses and cutting back on the more frivolous expenses – which can be a great place to start! However, it may not have the greatest impact.
For someone who really understands how to manage their finances, they will know which reports and analytics they can rely on to determine which expenses are helping them generate the most money. This may mean you find your CRM premium subscription to be essential but are all the additional features helping you generate more money?
They may be. But maybe the premium subscription is just for a slight convenience and not actually helping you generate any additional revenue.
The same can be said for revenue generating activities. While you may sell more of product A, product B costs more and you are actually generating more income with this product. For that reason, it may be worth focusing your efforts on product B.
As an accountant, I understand how big of a difference profit can make to a business. So working with my clients to ensure it is a priority will always be a focus.
If any of these solutions above seemed like something you may be interested in considering, send me a message. The more I can dig into your business with you the more tailored advice I can provide.