Are you profitable? Are you sure?
Are you experiencing financial chaos in your business? All too often, business owners are working so hard, they don’t even know where they stand financially.
In order to stop the chaos, the first thing you need to do is figure out if your business is profitable.
You may be surprised that what you’re doing is not turning a profit. If that’s you, you’re running around and doing all this work as a volunteer in your business — because that’s what we call work that does not pay!
Tweet this quote:
[Tweet “Make sure you’re not working as an unpaid volunteer in your business. #GetProfitable”]
How to Get Your Business to Be Profitable
The first step to becoming profitable is to find out what’s really going on in your business.
To do this, you’ll need to read your income statement (also known as your Profit and Loss Statement). If you’re like many business owners, you may have skipped learning this as you quickly started operating and growing your business.
Now’s a great time to learn how to read what your Income Statement tells you.
Step 1 – Do the Math
After looking at hundreds of small business profit and loss statements I have learned there is a direct connection between the business owners understanding their accounting statements and their companies’ profitability.
What a shock it often is when you get the first “aha’ moment learning that all this time you were actually NOT charging enough to cover your costs or that employee you were hanging onto really was the reason you are in your overdraft.
Your P&L as it is fondly know by has most of the information you need to make the changes required to to get you profitable.
Run your numbers through this simple profit calculating tool to see where you are at.
TIP: Be sure to include your wages in the operating costs. It’s important to know whether the cost of your time is included in your business.
Take the time to learn how to read your income statement, so you can determine whether your business is making a net profit. (Your income statement is also known your Profit and Loss Statement.)
Sign up for Systems Business Coach emails and get my Profit & Loss Calculator. http://bit.ly/1PcDUa6
If you’re not yet profitable, here’s what you can do to fix it.
If by chance you still might be volunteering AND donating to your small business, then these are the next two steps you need to take to become profitable.
Step 2 – Spend less
It’s as simple as that, spend less and you will be more profitable. Spend less on your costs of goods sold, your direct labor, and all your operating costs and those savings will go right into your bottom line.
Look for opportunities to save on costs.
When we get super busy it’s easy to just carry on doing and spending as usual.
You may not notice that your best supplier is giving your competition lower pricing than what you are getting simply because you have failed to stay on top of this and they aren’t about to tell you.
Or that new technology allows you to combine a number of programs you are paying for — but who has the time to figure that out?
Spending less can be as simple as asking your landlord for a rent reduction , hey it’s worth a try.
Here are a dozen ways to spend less: (link to another blog here)
Step 3 – Earn more.
Generating higher gross revenue is the fastest way to greater profits and may be easier that you think.
Inch up your pricing just a few percentage points and chances are none of your clients will even notice especially if your product or service is as great as you know it is.
Start here with those 3 things: learn how to calculate your profits, reduce your costs and increase your revenue.
Need help? Sign up for my FREE one-hour webinar and learn the top 5 skills small business owners need to make their businesses organized and profitable.