EXPLODE YOUR PROFITS
In the world of business, there is one major thought on every owners' mind, “Show me the money!”~Jerry McGuire. Unfortunately, most businesses are still waiting. Making more money more often isn’t always easy. As much as owners want it to happen now, it takes time to make realistic changes. Nevertheless, there are steps you can take to speed up the process.
Grow Your Business Geometrically
Many people use the term “the sky is the limit,” yet many astronauts have gone far beyond the earth’s atmosphere. Are you limiting your possibilities?
There are many strategies used to increasing sales. However, most growth falls under two major types: Linear Growth and Geometrical Growth.
The most common form of growth used is Linear Growth. Linear growth is producing more of what you all ready have. For example, if you owned an apple orchard, you would plant more apple trees to produce more apples.
The second form of growth is called Geometrical Growth. Geometrical growth is creating multiple streams of income for your business. This type of growth helps companies grow faster by selling a variety of products and services to more customers more often. In other words, you could sell not only apples, but cherries, peaches, oranges, strawberries, blackberries, jams, pie tins, and other complementary products.
Geometrical growth is one of the first steps you can take to speed up the process. Think about Wal-Mart. How many different types of products and services do they sell in their stores? Think about what streams of income you can create inside your business to produce more money more often. Although it may be more difficult to grow your business geometrically, all businesses should implement both types of growth to increase their profits more rapidly.
Geometrical growth is critical in stabilizing the business and for increasing revenue. If your business is not growing, it’s dying. Therefore, work on selling both existing products and new products to existing customers and new customers more often. If the customers value the products and services you are providing, they will often seek to upgrade or purchase additional products.
Also, think about forming alliances with other companies, and cross promoting your products and services. Creating alliances with other companies can increase profits substantially.
The internet provides a great deal of opportunities. In today’s economy, if you don’t have a website to promote your products and services, you are missing out on one of the greatest resources our economy provides today. The internet is the best way to reach out to the rest of the world. Increase your revenue streams by allowing others to advertise on your website. Learn how to drive traffic to your website using search engine optimization (SEO) techniques.
There are an abundance of opportunities available for increasing geometrical growth. Remember, the sky is not the limit. There is plenty of space for everyone!
Strategic Customized Solutions
Every business is unique. Even though you are in the same industry as your competitors, your business has a specific DNA make-up. Businesses do not have the same customers or personalities, and cannot have the same business systems or way of doing things as the next company—what works for one will not always work for another.
Businesses need customized solutions to really excel and explode profits. Not just any customized solutions, but accounting based strategies designed specifically for their business. When turning businesses around, the first step in conquering the money hurdle is to hire the right team of Profit Experts.
Profit Experts specialize in creating customized solutions that are easy for you to understand and implement. Those solutions will help you control your company profits on every job, product, or service you provide. They will help you to design a blueprint for your business to explode your profits. As Management Accountants, they are qualified to help you put each piece of the puzzle together properly to turn your business around, in most cases, within 90 days or less.
Many small business are like speed boats--they can be turned around fairly quickly. Larger and more complex businesses are like aircraft carriers or massive cruise ships; it takes more time to turn them around. However, making simple marginal changes can immediately jumpstart the process.
Know Your Business Intimately
A good friend of mine named Allen Bostrom, who has been a CPA now for more than 30 years, said, “If you’re not intimately aware of what is going on financially within your business, you may develop critical problems before you even know it. Long-term survival depends on your understanding of the company’s financial condition.”
Just like planting an apple seed, you have to water it, fertilize it, care for it, and plant it in the right kind of environment for it to grow properly. If the apple tree is not taken care of appropriately, the entire harvest can be destroyed by birds, bugs, and other outside threats. Too much water, sunlight, or fertilizer can damage the plant, so it takes a great deal of care and nourishment to produce a full harvest from an apple tree.
The same principle applies in business. In order to consistently improve profits and performance, you need to understand how to manage it correctly. Here are some jewels of wisdom:
- Learn basic accounting principles, and how to read financial statements.
- Keep your personal finances separate from your business finances.
- Learn how to control cash flow as it runs through your business.
- Track and measure your daily performance using score cards. You cannot control what you do not and will not measure.
- Work closely with a Management Accountant to learn what numbers you need to know and how to control them.
- Make adjustments as needed to keep your finances under control. Manage each business system strategically.
- Communicate with your accounting consultant regularly to seek new opportunities and to increase your knowledge, understanding, and wisdom.
- Establish an advisory group that will hold you accountable for your success. For example: a Banker, Insurance Agent, Lawyer, Accountant, Business Coach, Vendors & Suppliers, and other business owners in your same industry that you can trust.
- Work on improving your business systems and cycles of service daily.
Successful business owners, operation officers, and department managers know what is happening inside the business. You need to have a sense of what the numbers mean and how to influence them.
Score Cards
Consistent improvement depends on the success of using score cards. Take what you have and make it better by creating score cards to track and measure performance. Score cards will help you to measure and track the progress of each department, employees, and other leading indicators.
A score card should be created to track:
- Marketing Efforts
- Sales Success
- Production Processes
- Accounting Details
- Business systems
- Employee Performance
- Management Performance
- Operations & Training
- Customer Satisfaction
- Cycles of Service
Each business is unique; as a result, each business may have other leading indicators that they use to track and measure performance.
The more you know about the numbers that run your business, the greater your chances for success will be. By nurturing your business processes and procedures properly, you will no longer have to say “Show me the money!” Instead, you will enjoy the fruits of your labors and know first hand how to explode your profits.