Today, we’re talking about three processes you need to grow your profit — and these probably aren’t what you’re thinking!
I’m not going to tell you to roll out a high ticket offer. I’m not going to tell you to roll out a ton of marketing funnels. I’m not going to tell you to start running Facebook ads or any other activities to improve your profits.
Here’s the truth: When I was in a mastermind with 24 other business owners, one of the biggest topics of conversation was ALWAYS around how to increase profits. And in this mastermind, you had to be making at least $150k a year, and many people in there were making close to a million dollars.
I want this to sink in for a minute because there are a lot of people out there running around touting their revenue number and they’ll throw BIG numbers down.
But what you and I don’t know (usually) is what it cost them to get those numbers.
Because revenue is only part of your profit equation. An important part, but only a part.
If a business owner makes $30,000 a year in her business, and it only cost $5,000 to run that business, she’s making $25,000 in profit, right? That’s an 83% profit, which is pretty amazing. (Although I might wonder if they’re leaving money on the table by not investing more, but that’s another convo!)
And if a business owner makes $300,000 a year in her business, and it costs $275,000 to run that business, she’s also making a $25,000 profit. But in this case, she only has a 9% profit margin, which means that most of the money she makes is going out the door as fast as it’s coming in. That’s FINE if that’s where she wants to be…
Just to be clear, a 9% profit margin isn’t bad. Profit margin depends on SO MANY FACTORS, so depending on your goals and your focus, you get to choose what profit margin is right for you. I just want to illustrate that going by REVENUE alone is a silly way to figure out if a business is growing and successful.
That’s why we’re talking about three processes you need to put in place to make sure you’re not spending your revenue faster than you can make it AND that you’re clear on the investments you want to make to reach your own unique goals.
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The three processes you need to put in place:
- #1. A Goal
- You need to know your profit goal. If you don’t know how much you need to make a month to run your business AND be profitable, it’s going to be really hard to have a profitable business.
- Take the time to create your revenue and profit goals for the year. Then break it down to each month. Then break it down to each week.
- Once you clearly know what your goal is AND what you need to do every single week to reach that goal, you’ll be well on your way to a more profitable business.
- #2. A Bookkeeping Process
- In my experience, roughly 9 out of every 10 business owners I’ve come into contact with don’t have a solid bookkeeping process in place.
- When you’re trying to run a business, it can be a bit of a challenge. When you don’t know where you are revenue-wise, what your monthly expenses are and don’t know how much wiggle room you have to invest or not makes it hard to run your business effectively.
- There are many amazing bookkeepers out there who are NOT THAT MUCH each month. They’ll keep track of your revenue. They’ll keep track of your expenses. They’ll give you trends and reports and a snapshot into your business so that you never have to worry, wonder, or guess.
- Yes, there are do-it-yourself options, but I suggest finding an option with a human attached so that YOU don’t have to do it. Think of this as a VA for your record keeping. Simple, easy, and DONE.
- #3. A Clear Understanding of Your Profitability
- When I talk to people about their profitability — especially as we’re doing a launch debrief or a facebook ad campaign review — a lot of times this is the FIRST time they’ve ever gone deep into how everything comes together. Their sales, their costs, and their profit margin.
- This kind of insight is so powerful and empowering. When you know you spent $2,000 on Facebook ads, and from that, you got $48,000 in sales, it empowers you with insights about how to grow your business.
- This process doesn’t have to be difficult or expensive.
- I’ve got a spreadsheet that I walk through with my clients where we can capture all their insights, but even if you just want to write it down on a piece of paper, you can get a great idea. Simply answer questions like: How much did you sell? How much did it cost you to sell that?
- If you start there to see what drives your profitability, you will be empowered to make better choices in your business and create Profit Without Worry for yourself.
Create Profit Without Worry — one system at a time. I’ll show you how to attract a steady flow of buyers without all the hustle with this free download → 5 Steps to Profit Without Worry.
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