Here are the Profit Killers You Should Prioritize

Recently, we discussed profit killers, what they are, and what it takes to fully eliminate them. As a quick refresher, a profit killer is a flaw or problem in your business that prevents you from reaching your full profit potential. Getting rid of profit killers takes hard work and full commitment, but it’s rare that a solution to your problem hasn’t been found previously. Virtually every business has dealt with profit killers of their own at some point or another, and as a result, a solution to your problem is likely out there already. Identifying profit killers is not an easy first step, but once you overcome that initial hurdle, eliminating them is a less difficult task than you might expect.

In my experience, I’ve found that there’s shockingly little difference between struggling businesses and successful ones—profit killers are one of those differences, and arguably the most important. With all of this in mind, let’s say you’ve done your homework and identified the profit killers in your business. Better yet, let’s say you took my Profit Killer Diagnostic Quiz, which will help you identify the profit killers in your business. How do you prioritize the ones to eliminate? Where do you even begin? This week, we’re going to go more in-depth on this topic, so if you’re ready to take the next steps, read on and get ready to take notes.

The Profit Killer Diagnostic Quiz

If you haven’t been able to check out my Profit Killer Diagnostic Quiz, don’t worry, we’re going to go over it right now. I’ll lay out the questions for you below, and your answers, all a simple “yes” or “no,” will determine what’s hurting your business and give you an idea of where you should place your focus first.

Marketing & Sales

1. Have Your Sales Increased by 20% or Moreover the Last Three Years? YES/NO
2. Do You Have a Distinct and Easy-to-Explain Selling Position?/What Makes You Different? YES/NO
3. Do You Have a Written Description of Who Your Ideal Customer is? YES/NO
4. Do You Have a Written Marketing Plan to Which You Can Refer? YES/NO
5. Do You Have a Written List of the Problems Your Prospect Needs/Wants to Have Solved? YES/NO
6. Do You Have a Written Plan of Increasing Sales from Current Customers? YES/NO
7. Do You Have a Written Plan for Increasing Referrals? YES/NO
8. Do Your Customers Have a Consistent Quality Experience Every Time, Even if You’re Not There? YES/NO
9. Do You Have a Customer Retention Plan? YES/NO
10. Do You Have a Social Media Marketing Plan? YES/NO
11. Can You Honestly State That You Provide Consistent LEGENDARY Customer Service? YES/NO
12. Last Year, Did You Increase the Number of Prospects Who Became Customers by Over 10%? YES/NO

Money Matters

1. Has Your Net Profit Increased by 25% Each of the Past Three Years? YES/NO
2. Do You Know the Lifetime Value of Your Average Customer? YES/NO
3. Do You Review Your Critical Numbers at Least Once a Month? Once a Week? YES/NO
4. Do You Have Enough Cash to Pay Your Monthly Bills? YES/NO
5. Does Your Company Have a Reserve Equal to Two Months of Overhead? YES/NO
6. Do You Have a Problem Collection Customer Receivals? YES/NO
7. Do You Have a Written Cash Budget? YES/NO
8. Have You Added at Least One New Product or Service in the Last Year? YES/NO
9. Are You 100% Sure That You’re Not Undercharging for Your Products or Services? YES/NO

Managing Your Business

1.  Do You Have Written Long-Term Goals AND a Plan for Reaching Them? YES/NO
2. Do You Have a Written Profit Plan? YES/NO
3. Do You Have Motivated, Loyal, Well-Trained Employees? YES/NO
4. Do You Spend at Least Four Hours a Week Improving Your Business Instead of “Putting Out Fires?”YES/NO
5. If so, Do You Spend the Majority of That Time Looking For Ways to Increase Sales & Profits? YES/NO
6. Do You Have a Written Fraud Prevention Plan? YES/NO
7. Is the Work You Delegate to Employees Completed Correctly and On Time? YES/NO

Taxes

1. Are All of Your Payroll Taxes Paid on a Timely Basis, Without Penalties? YES/NO
2. Are You Sure You’re Paying the Lowest Income Taxes Possible? YES/NO

The Next Steps Towards Eliminating Profit Killers

If you answered “Yes” to all of the questions above, congratulations! There’s a strong chance that you’re running a successful business. If you answered “No” to a good amount of them, don’t be discouraged—these are all fixable problems, and in this next section, I’m going to go over what you should do next to help yourself.

I want you to look at every question to which you said “No” and identify your top three to five most consequential answers. Specifically, I want you to isolate the answers that will have the biggest effect on your bottom line in the shortest amount of time. Put a 1 next to the item you feel is most important, a 2 next to the one you feel is the second-most important, and so on. Again, you want a minimum of three and an absolute maximum of five—any more than five, and you won’t be able to do this correctly.

At first glance, it may be difficult to determine which questions are the most important. In my experience, however, most business owners really do know once they think about it for a few minutes. After all, nobody knows your business better than you do—trust your own intuition. If you’re really struggling to identify your top issues, however, don’t hesitate to talk to your business partners, your employees, your CPA, or anyone else closely involved in your business. They can provide valuable insight for you to help fill in the gaps.

One thing I’d like to highlight: Don’t just fly through this exercise. This quiz is more than a simple checklist. If you take the time to focus on these issues instead of throwing a bandaid on it and calling it a day, you can MASSIVELY increase your bottom line. If you’re paying a CPA or business coach to help you, I’ve seen profits increase well beyond whatever you’re paying them.

Now, you should be able to fully identify your profit killers and prioritize the biggest ones. I hope you take this exercise to heart and are able to fully commit yourself to improve the bottom line of your business. There’s a lot of information here today, so if you need any more help or clarification, please don’t hesitate to reach out to me. Until next time, stay safe, stay healthy, and like I always say, “Let’s make this our most profitable year ever.”