Why are profits so important? Here’s why:
- Profit is the only objective measure of your company’s performance. When people use profit for scorekeeping, there’s a clear-cut way for everyone to know how well the company is doing.
- Close behind profit can follow bonuses, profit sharing, and savings plan contributions.
- Profit means customer needs and problems can be fully addressed. Happy customers mean repeat business and a growing company.
- Profits provide the ability to weather the unexpected downturns that sooner or later strike every business.
Profit provides an ongoing source of cash, your company’s lifeblood and the fuel for future growth. Your profitability, or lack of it, will determine your company’s quality of life. When a company is profitable it has:
- Happy, well-paid employees
- Happy bankers and investors
- Happy customers who buy more and tell their friends.
- Happy owners (and family) who can afford the lifestyle that success brings.
To increase profits, your whole company must have a profit mindset. That’s the whole purpose of the bonuses, profit sharing, and 401(k) matches. They are to give your employees an incentive to help you increase profits. That’s why you need to stress profits and always reinforce the fact that your employee’s goals and the company’s goals are identical.
There are three things you must do increase your business’s profitability:
- Decrease expenses
- Increase margins
- Increase sales
Every customer should have a Profit Enhancement Officer who keeps the company focused on increasing profits. Obviously, the owner should be the prime Profit Enhancement Officer. Unfortunately, owners tend to be so busy running the company and putting out the daily fires that they seldom have the precise focus required to increase profits. This is one of the main reasons for hiring a consultant. Another good way (speaking modestly of course) is to join our monthly profit coaching program. Go to www.FreeISBstrategies.com to watch our free webinars designed to help you improve your sales and marketing.