..the alternative to an unprofitable business is unemployment.
“If my businesses or my investments are not profitable, then I don’t eat. And I like to eat.” – Kiyosaki
How would you feel if, every year your business grew, you made less money?
Interestingly, this is a common pattern we see when going into a growing businesses: sales increase, staff numbers increase and profits decrease.
Although there are a range of different factors which come into play when reviewing a business to determine profit opportunities, fundamentally there are only 4 things a business can do to increase profit:
1. Sell more
2. Sell more often (i.e. incentivise your customers to buy from you more frequently)
3. Increase prices
4. Reduce costs
The issue is not in understanding the premise of how a business should increase its profitability but in the careful execution of a customer profit improvement strategy, which enables it to happen.
In other words, as a business grows and starts to take on a momentum of its own, the business owner often ends up getting swept along and this means that urgent daily tasks take precedence over quality strategic thinking.
You may have had experiences of your own where you end up embarking on a new product launch, which you run for months (or even years) only to realise through subsequent analysis that the product is barely generating profit.
This usually occurs due to a lack of detailed strategic planning. Profitability of any particular product or project should be evaluated in the concept stage, in the launch stage and then periodically thereafter. Waiting too late into the process (i.e. when it is clear things aren’t working) is the most common mistake.
Business owners often know instinctively when a product or project isn’t working, but often look at increasing sales as the way to fix the problem when a more technical/detailed appraisal of the situation is required. But so often that isn’t the problem; one company comes to mind, whose sales reps sell huge quantities of the cheapest product range because it is easy. The Sales Manager sells a fraction of their quantity, but of a much higher quality and so gives far more back to the business.
Failing to generate sufficient profit can stifle a company. A great product and an industrious team can create the illusion of a successful, growing business. It can be very frustrating to inject time, energy and resource into production and innovation to discover down the line that the underlying metrics don’t work.
As with many challenges facing growth businesses the solution lies in good planning for profit improvement.
We’ll help you identify, grow and keep a profitable and loyal customer base. The identification is the stepping stone, and can be a real eye opener for most businesses.
You know how hard it is to earn and retain customer loyalty. In the face of increasing competition getting customer loyalty and profitability right requires segmentation and targeting techniques and ensuring that marketing effectiveness and investment is quantifiable. Identifying which customers are most profitable, and most likely to stay with you regardless of the competition, will help with marketing activity decision making, will set realistic budgets and act as a tool to assess the risks associated with alternative marketing plans.
We will help you identify how to develop marketing strategies that give the greatest returns and grow customer loyalty, as well as identify which customers are less likely to produce a good return on investment.
As well as that, we look at the product range you sell. We once walked into a company that had 26 products, selling to thousands of customers. By the time we finished, they were selling a single product to just a few hundred customers, yet their profitability tripled!
The benefit of a part time Marketing Director who understands profit to a CEO
We can streamline customers and products until they for a profitable hub of a company. If we could identify the #1 marketing problem in businesses, it would be a lack of understanding of customers. Close behind that, would be a misunderstanding of where profitability is coming from.
If we could help a business owner unearth the truly profitably products and customers in their business, it would be transformational. Less sales staff, less manufacturing cost, less clients, better service to those clients. The list would go on. Seems so obvious, but this is actually what most businesses need, a review of their profitable segments.
If we didn’t reduce your product range, but instead, changed the way you sold to certain customer segments, the resources in terms of cash that is freed up to a business can be a game changer. It is such a fruitful exercise. We should do it today.