Since last week’s election, I have had numerous
conversations with business owners who are expressing nervousness about the
economy. I tell them that they have very
good reasons to be nervous. The election
left business owners looking at a continued stalemate in Washington with a government that is looking
for ways to increase revenues in order to cover excessive deficit spending.
Business owners rightfully see their business being
negatively affected by increases in federal and state taxes, tougher bank credit
rules, increased audits by the IRS and state, customers who are more cautious
with their money, and new ObamaCare taxes and rules.
What most business owners do when they get nervous
is hunker down and play defense. They
cut costs, cut employees, cut advertising, and do more of the work themselves. But that may not be the correct thing to do
when the economy is tough.
Now when times are good and profits are easy, many
business owners become a little lackadaisical about improving their
business. When the economic landscape is
tough, like it is now, that is no longer an option. In
order to survive (and even thrive) in a tough economy, the business owner must
become a profit coach for his business.
Most business owners do not understand that there is
a formula and a process to improving profits.
I express it as a formula as follows:
A 10 percent increase
in qualified leads…
+ A 10 percent increase
in the conversion of these leads into paying customers
+ A 10 percent increase
in annual sales amount per customer
+ A 10 percent increase
in referrals from current customers
+ A 10 percent increase
in customer retention
=
A 10 percent increase in sales
+ A 10 percent increase
in efficiency due to improvements in systems and training
– A 10 percent decrease
in product costs, overhead expenses, and income taxes
=
A massive increase in profit!
A massive increase in profits resulting in increased
cash flow and owner compensation is not an accident! It is the result of systematic, daily
improvement in each area of the profit formula.
But most business owners are so busy working in their business that they never seem
to get around to working on improving
the business. The business owner must
commit four hours a week to work on improving their business by following the
profit formula.
Stay tuned for a new coaching program that we will
be launching soon that will provide the structure and guidance you need to
become the profit guru for your company.
Thank you for your continued support and let's
make this year our most profitable year ever!