Using the 10% Profit Formula to Thrive During Tough Economic Times

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10% Profit Formula

During tough economic times, I notice a clear pattern among most business owners. As there are increases in federal and state taxes, tougher bank credit rules, new healthcare laws, and less consumer spending, these business owners start to panic.

As a result, they quickly cut employees, advertising expenses, and all sorts of other costs. Then, they personally pick up all of the extra slack and hunker down until the storm passes.

In other words, they start playing defense.

While this approach is certainly understandable and often necessary, it begs the very important question, “Why don’t these same business owners play offense during strong economic times?”

Instead, it seems as if the financial cushion and added comfort that they experience up on the mountaintop causes them to grow complacent. They don’t work on improving their businesses while the opportunity is ripe.

In any case, trying economic circumstances will usually wake up even the most complacent business owner.

How do you ensure that your business not only survives but also thrives in a tough economy?

Simply put, you need to become a profit coach for your own business.

Enter: The 10% Profit Formula

Did you know that there is a clear, proven process for increasing your business’s profits? I call it the 10% profit formula.

What this formula does is cause you to make manageable, systematic improvements to all of the major elements of your marketing and sales strategies—yielding a highly profitable outcome.

There’s no catch. If you can work to apply each step of this equation to your own business during economic hardship, you can all but guarantee your business’s success.

Ready? Here’s the formula:

A 10% increase in qualified leads

+ a 10% increase in the conversion of these leads into paying customers

+ a 10% increase in the annual sales amount per customer

+ a 10% increase in referrals from current customers

+ a 10% increase in customer retention

= a 10% increase in sales

+ a 10% increase in gross margins

– a 10% decrease in product costs, overhead expenses, and income taxes

= a massive increase in profit!

Needless to say, that enormous increase in profit provides greater cash flow and owner compensation at a time when it is sorely needed. And it’s no accident!

By systematically improving your business by 10% in each of these areas, your business can thrive during even the toughest economic climate.

The unfortunate truth is, however, that too many business owners ignore most of the formula and skip forward to the second-to-last line of the equation. As soon as hard times hit, they will automatically resort to decreasing their product costs, overhead expenses, and income taxes without making any other changes to their businesses.

Why? Well, because making cuts is the easiest thing you can do to stay afloat while times are hard.

Systematically improving your business, on the other hand, requires you to do a little extra work beyond your normal day-to-day duties and standard office hours.

It’s Time to Start Working on Your Business

Sadly, the majority of business owners today are so focused on working in their businesses that they never actually work on their businesses. While their day-to-day operations may be in order, their businesses never make any significant forward progress.

What this means is that, during tough economic times, the best they can hope for is to stay afloat.

So, are you ready for a challenge?

Could you commit just four hours per week to work on your business, in addition to the time you’re already spending in your business?

While four hours might sound like a large chunk of extra time—and perhaps it’s time you believe you simply don’t have—it breaks down to less than an hour per day. Is your business worth that to you? Of course!

This is all of the extra efforts that is needed in order for you to apply each step of the 10% profit formula, make significant improvements to your business, and start increasing your profits today.

By doing this, you can drastically improve the trajectory of your business—regardless of whether you’re enjoying the spoils of a strong economy or navigating the turbulent waters of a tough economy!